10/24/12 9:36 AM – When to Buy International Stocks?

Which is the best performing mutual fund over the last 3-4 months – S&P 500 Index Fund, Harbor International Stock Fund (mainly Europe) or Thornburg Developing Markets Fund (international emerging markets)?

Since early June, the emerging markets fund has returned roughly 15%, the largely European fund 13% and the US fund 10%.

So, should we start increasing weightings in international stocks? After all, my client allocation overseas is as low as it has ever been and I think many people can say the same.

And, Europe is in a mess and the economy in recession. The latest numbers show no progress on economic growth. Emerging markets have underperformed the S&P 500 over the last 18 months as they have grappled with the spillover effects of Europe, the US and China. China has been slowing down more than anticipated. These seem like good reasons to stay in the US, which has done better.

But remember, the best time generally to buy stocks is at the bottom of a recession. We just don’t know if we have touched bottom yet in Europe. I will be keeping a lookout there.

For aggressive clients I already own Thornburg Developing Markets Fund. I may add that to moderate accounts as well. On Europe I am more skeptical and am not yet convinced.