The best performing big mutual funds in the third quarter were boosted by foreign stocks, especially China equities.
World equity stock mutual funds outgunned U.S. diversified stock mutual funds , 6.42% vs. 4.80% on average. And China region funds paced all foreign stock fund groups, gaining 11.36%.
Among the 25 largest mutual funds, $126.29 billion American Funds EuroPacific Growth ( AEPGX ) was the top performer with an 8.14% gain, according to Lipper Inc. Eighty-eight percent of its shareholders' money was at work in foreign stocks as of June 30. That's mostly divided between European and Asian equities, with a 43% and 39% split.
Seven percent of the fund is in China names, which also were among the top contributors to fund performance in the quarter. Hong Kong-based financial firm AIA Group, which provides insurance, savings and investment services, gained 11%.
Alibaba Group ( BABA ) is another holding. The internet retail giant soared 33% during the quarter. It got a big boost when it posted first-quarter earnings growth of 25% in August -- reversing a fourth-quarter decline of 4%. Its first-quarter results beat Wall Street analysts' consensus estimates and showed strong growth in mobile and cloud computing.
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Investors in EuroPacific Growth also benefited from its non-China foreign stocks, including HDFC Bank ( HDB ). The bank holding company, which is based in Mumbai, India, rose 8% in the third quarter. The company has posted a pretax margin above 26% for three straight years.
The $221.48 billion Vanguard Total International Stock Index Fund ( VGTSX ), second best performing fund, had 96% of its shareholders' money at work in foreign stocks as of July 31.
Tencent Holdings ( TCEHY ) was a top contributor, jumping 21%. Earnings have grown 16%, 27% and 36% the past three stanzas. The China messaging giant trades over-the-counter in the U.S.
Still, not all of the top-performing big funds were focused on foreign stocks. The $145.69 billion Growth Fund of America (AGTHX) gained 6.47% in the third quarter. It was the third-best performing among the biggest funds. But it had only 11% of its shareholders' money in foreign stocks as of June 30.
Top holding Amazon (AMZN) climbed 17% in the third quarter. The internet and cloud-computing giant has posted triple-digit earnings growth for five straight quarters.
EOG Resources (EOG) was another big contributor. Light sweet crude oil rose 23% to a price above 48 by quarter's end from below 40 on Aug. 3. That helped fuel EOG, an exploration and production company, up by 16% in the quarter.