Stock Pros Beat Indexes If Overseas
LONDON -- For investors looking abroad these days, the tune is: Jack be nimble, Jack be quick. Choose a money manager who can make the right stock pick.</br></br>Performance data on international portfolio managers indicate that when investing outside the U.S., lately it has been more profitable to go with so-called active managers who are free to pick and choose among individual stock markets and stocks rather than merely mimic an overall index.</br></br>Last year, U.S. pension funds that invest in foreign stocks posted a median 6.7% return, compared with a 1.9% total return (price appreciation plus dividends paid) for the benchmark Morgan Stanley Capital International Europe Australasia Far East (EAFE) index of 21 major overseas markets, according to InterSec Research Corp. of Stamford, Conn.</br></br>Active managers have beaten the index in seven of the past 10 years, InterSec says. The trend held last year for mutual funds as well. The average return of 410 actively managed international mutual funds tracked by Lipper Analytical Services was 5.7%.</br></br>These results might make some investors sneer, compared with last year's 31% rise in the U.S. market, as measured by Standard & Poor's 500-stock index, the third consecutive year of outsize U.S. stock returns.