Big international stocks are rising above strife

Even though world turmoil is a daily preoccupation in 2006, big international stocks are quietly saving the investment day.

As U.S. stocks have faltered, global shares have picked up the slack in portfolios fortunate enough to own them. Encouraged by their vibrant domestic economies, overseas firms are taking on the world.

For example, Janus Overseas Fund has been boosted by its stock in Reliance Industries Ltd., an aggressive Indian conglomerate with petrochemical and refining businesses that is branching out into retail. The fund also owns Samsung Electronics, the high-visibility Korean semiconductor, cell phone and flat-panel-display giant; and Tata Steel Ltd., one of the world's low-cost steel producers.

The Janus Overseas Fund is up 17 percent this year, with a three-year annualized return of 32 percent. Because the stocks mentioned aren't readily available in the United States, a fund able to properly research and trade them provides a sensible way for individuals to invest internationally.

"We're seeing real signs of a pickup in Japan, and Asia's twin pillars of growth are China and India," said Brent Lynn, portfolio manager of Janus Overseas (JAOSX). "There could be as many as 300 million people moving to China's cities in the next few years — about the same as building a whole new United States."

Ahead are enormous infrastructure needs, such as roads, railroads, airports, subways, buildings and housing, said Lynn, who expects a housing boom in China and India for years to come. The Chinese economy is growing so fast that it also is pulling along additional world economies, especially those in the Asia-Pacific region such as Australia.

International large-cap stock funds are up 10 percent this year, with a three-year annualized return of 21 percent, according to Lipper Inc. That compares with a fractional gain by large U.S. diversified stock funds this year, with a 12 percent annualized return over three years.

"While the U.S. economy is slowing down, some of the major foreign economies are holding steady or modestly accelerating," said Patrick Fearon, senior economist with A.G. Edwards & Sons. "For example, Western Europe is benefiting from good export growth and economies that are slowly starting to gel."

Attention to large-cap international stocks is overdue.

"International investing has been the place to be since 2003 due to the decline in the valuation of the dollar and, more recently, mergers and acquisitions in Europe," said Phil Edwards, managing director of Standard & Poor's Investment Services.