Europe

The World is Your Oyster: Authoritative Survey of International Index Funds

Europe

One point is not up for debate: global diversification is becoming more elusive, as correlations between American and foreign markets increase. Industries like banking and telecommunications are following each other much more closely than they did a decade ago.

That doesn't deter Barclays' Schoenfeld, who thinks that despite increasing correlations, there's still plenty of opportunity in the zig of one market and the zag of another. And Schoenfeld says getting into international indexing is about more than just reducing risk. He insists that an investor's most important task is not to miss out on opportunities. The wide sweep an index fund offers gives investors access to a variety of ways to profit.

"By only investing domestically, you are missing out on a lot of corporate earnings," Schoenfeld says. "It's not just the diversification, but the question of what are you missing? You run the risk of not having exposure to great companies." Schoenfeld mentioned Daimler-Chrysler, BP Amoco, Deutsche Bank, and Nokia as examples of the goodies an America-only investor would deprive himself of.

"When you think about diversification and the benefits - both portfolio enhancement and not missing out - the most important thing for investors is to get some exposure: a toe in the water," Schoenfeld says. "The most important thing is to just do it," he says. And "indexing, just as in the U.S., and in my view, more so abroad, is the most efficient way to do it."

Before you start crunching the numbers to form your own opinion, ponder this caveat from the Investment Company Institute (ICI) - don't blindly compare countries, because each has a vastly different reporting system. Proceed carefully, and read the fine print. Compare like funds to like funds, so don't look at an England fund next to an all-Europe index fund. Even the phrase "international index fund" can be deceiving, and such funds may actually contain as little as 58% non-U.S. stocks.

Number-Crunching

The ICI has no category data for international index funds, meaning it's back to individual numbers. Out of some 306 index funds included in Morningstar's massive Principia database, only 51 have 50% or more of their assets in non-U.S. stocks. Out of that total, 22 are exchange-traded funds (listed on a separate chart below).

Wiesenberger, which does not sort by index fund, lists over 1100 funds with international holdings of 50% or more international holdings. With our fine tooth comb, we are able to distill a total of 48 traditional open-ended international index funds from the field. In addition, investors can choose from an array of 22 international i-Shares, which offer mostly single-country indexing sold as shares on the American Stock Exchange (AMEX).

The following is a list of traditional open-ended index funds available to U.S. investors seeking to invest internationally. For a list of international exchange-traded funds, see the section on ETFs later in the article. 

Fund Name
Ticker
Expense Ratio
Tot Ret YTD
Tot Ret 12 Mo
Tot Ret Annlzd 3 Yr
Tot Ret Annlzd 5 Yr
Tot Ret Annlzd 10 Yr
Net Asset Value ($ millions as of 7/31/2000)
Am Century Global Nat Rs Inv
BGRIX
0.68
1.3
-4.28
-1.01
-
-
52.5
AXP International Equity Index D
-
0.64
-
-
-
-
-
23.7*
AXP International Equity Index E
-
0.64
-
-
-
-
-
23.7*
AMIDEX35
AMDEX
-
29.46
78.92
-
-
-
12.4
AMIDEX35 A
AMDAX
2.2
24.78
-
-
-
-
1.3
Calvert World Values International Equity Fund (Class A Shares)
CWVGX
-
15.17
9.53
12.08
-
-
268
Capstone SERV Intern C
CSINX
0.39
-6.27
7.86
-
-
-
45
Deutsche EAFE Equity Idx Prm
BTAEX
0.4
-4.46
17.38
-
-
-
240
DFA Emerging Markets Value
DFEVX
1.75
-
-0.39
-
-
-
53
DFA International Value II
DIVTX
0.55
0.14
-
-
-
-
45
DFA International Value III
DFVIX
0.34
-7.92
10.22
6.27
8.97
-
242
DFA International Value IV
DFVFX
0.44
-9.59
10.65
-
-
-
127
DFA Tax-Managed International Value
DTMIX
n/a
-
8.43
-
-
-
89
Dreyfus Intl Stock Index
DIISX
0.6
-5.02
16.43
9.31
-
-
51.3
E*TRADE International Index
ETINX
0.5
-9.1
-
-
-
-
8.8
Fidelity Spartan Intl Index
FSIIX
0.36
-4.71
17
-
-
-
344.7
First American Intl Index A
FIIAX
1
-4.4
15.82
9.18
9.93
-
3.2
First American Intl Index B
FIXBX
1.75
-4.75
14.83
-
-
-
0.9
First American Intl Index Y
FIICX
0.75
-4.26
15.98
9.7
10.41
-
111.3
MainStay Inst EAFE Instl