Indian Funds Lead Foreign Pack

The beauty of building wealth in the 21st century is that we have the freedom to choose from a wide variety of professionally managed investment vehicles, depending on how much time we want to spend managing our money.

For passive investors and investment professionals under onerous trading restrictions, there are complete all-in-one solutions from asset-allocation funds that gradually get more conservative over the decades. And for investors with the time, inclination and savvy, there are ample choices for micro-managing each portion of your portfolio, right down to the selection of individual country weightings. That's the role geographically focused funds play.

The fortunate individuals who outsourced their global allocation to India were richly rewarded this week. Four of the 10 best-performing, geographically focused funds specialized in Indian companies.

At 12.85% for the five trading days ending Nov. 1, none did better than the iPath MSCI India Index ETN (INP Quote). This is an exchange-traded note, which is similar to an exchange-traded fund. The difference is that ETNs are designed to have less tracking error than ETFs so that the value of the investment more closely mirrors that of the underlying index.

In this case, Barclays Capital, a unit of Barclays PLC (BCS Quote), created a 30-year senior, unsecured debt instrument that pays holders of the ETN the return of the equities in the MSCI India Total Return Index minus the expense ratio.

The (IFN Quote)India Fund Inc.(IFN), a closed-end mutual fund, did almost as well, spiking 12.58%. The fund allocates 15.8% of assets to software, 13.2% to oil and gas, 10.3% to banks, 9.4% to telecommunications, 5.4% to auto manufacturers and 4.9% to electrical components and equipment.

Of the holdings aiding the strong performance, Jindal Steel and Power rose 52.68% on a 76% increase in second-quarter profits, while Jindal Saw added 34.61% on an even bigger 89% bump in profits for the same period, and Bank of India gained 28.07% on the biggest second-quarter profit swell of 101%.

The third India-focused fund, (IIF Quote)Morgan Stanley India Investment Fund (IIF), trailed its fellow countrymen with a 6.36% return. The best-performing holdings included Nestle India, up 19.76% on higher third-quarter profits, Bharat Heavy Electricals, up 16.25% as it rehires laid off workers to fill back orders, and Jyoti Structures, up 15.41% on increased demand for new electrical transmission line construction.

(Please see the table below.)

Best-Performing Geographically Focused Funds Ranked by returns for the week ending Nov. 1
Fund	Ticker	Rating	Fund Type	1 Week Total Return
iPath MSCI India Index ETN	INP	U	ETN	12.85%
India Fund Inc	IFN	B-	Closed-End	12.58%
Morgan Stanley India Investment Fund Inc	IIF	B-	Closed-End	6.36%
PowerShares FTSE RAFI Japan Portfolio	PJO	U	ETF	6.05%
T Rowe Price Africa & Middle East Fund	TRAMX	U	Open-End	4.45%
iShares MSCI Brazil Index Fund	EWZ	B	ETF	4.31%
Fidelity Advisor Korea Fund	FAKAX	B	Open-End	4.27%
DFA Asia Pacific Small Company Portfolio	DFRSX	B+	Open-End	4.08%
JPMorgan Asia Equity Fund	JPAIX	A	Open-End	4.06%
JPMorgan India Fund	JIDAX	U	Open-End	3.98%
Source: Bloomberg

For an explanation of our ratings, click here.

Investors in the (CUBA Quote)Herzfeld Caribbean Basin Fund (CUBA) felt flattened, breaded and fried like my favorite bistec empanizado as the closed-end fund lost 8.58%. Its net asset value slipped 2.36% on outsized declines of 15.35% in Garmin (GRMN Quote), 14.11% in Atlantic Tele-Network(ATNI Quote) and 10.76% in Vitro SAB de CV (VTO Quote)(VTO). But its share price fell even faster than its NAV, resulting in a contraction of its premium to NAV to 17.5% from 25.5%.

The (IRL Quote)New Ireland Fund (IRL) suffered an 8.37% setback as troubles in the Irish real estate market chopped 13.75% off McInerney Holdings PLC, a property developer, and 7.45% off Grafton Group PLC, a building supply manufacturer. With borrowing costs rising, Irish home prices declined 2.8% in September over the same month last year. The worst home value deflation in the last 10 years was a bit too much to weather.

Worst-Performing Geographically Focused Funds Ranked by returns for the week ending Nov. 1
Fund	Ticker	Rating	Fund Type	1 Week Total Return
Herzfeld Caribbean Basin Fund Inc/The	CUBA	C+	Closed-End	-8.58%
New Ireland Fund Inc	IRL	C+	Closed-End	-8.37%
Taiwan Fund Inc/The	TWN	B-	Closed-End	-5.44%
China Fund Inc	CHN	B-	Closed-End	-3.21%
Mexico Fund Inc/The	MXF	A	Closed-End	-3.17%
First Israel Fund Inc	ISL	B-	Closed-End	-2.25%
iShares MSCI Mexico Index Fund	EWW	B+	ETF	-2.12%
Mexico Equity and Income Fund Inc	MXE	C+	Closed-End	-1.90%
Thai Capital Fund Inc/The	TF	C	Closed-End	-1.67%
Asia Pacific Fund Inc/The	APB	B+	Closed-End	-1.37%
Source: Bloomberg

For an explanation of our ratings, click here.

So, whether you pick individual countries or broad-based international funds, you can be fairly certain that there is a bull market hiding somewhere around the globe. Bon voyage!