Global Mutual Funds Bounce Back; Emerging Markets Aided Third-Quarter Returns; 'A Lot of Volatility' Ahead
Following the selloff that hit global markets in May, international stock mutual funds -- especially those focused on emerging markets -- bounced back in the third quarter, even if investors weren't rewarded as handsomely as in previous periods.</br></br>With the exception of Japanese-stock funds, international mutual funds were in the black in the period, faring well against their U.S. counterparts. International large-cap value funds, for example, rose 3.2% in the quarter through Sept. 26 versus a 5.3% rise for the corresponding U.S. category, according to preliminary data from fund researcher Lipper Inc.</br></br>Diversified emerging-market funds were standouts, up 4.4% on average. "The big surprise is how emerging markets, especially Asian and Latin America, came back strongly this quarter. It stands in the face of the expected U.S. economic slowdown," said Arijit Dutta, analyst at investment researcher Morningstar Inc.</br></br>Mutual funds invested in Asia outside Japan gained 5.3% in the quarter through Sept. 26, according to preliminary data from Lipper. Other notables: European region funds, up 4.2%; China region funds, adding 3.8%; Latin American funds, up 3.5%. Japan funds parted from the group, shedding 4.5%.</br></br>Emerging markets bounced back from a sharp correction in May after the U.S. campaign of interest-rate increases was put on hold, Mr. Dutta said.