Just Say Nyet to Russian and Eastern European Funds

This is the first in a series of in-depth looks at this year's outlook for international funds.

If you were asked to guess what the best-performing European fund so far this year was, chances are you wouldn't name the $2 million (TMRFX Quote)Third Millennium Russia fund.

But there it is atop Morningstar's list of the top 10 performing European funds this year with a 31% year-to-date return. Coming in second is the $39 million (LETRX Quote)Pilgrim Troika Dialog Russia fund with a year-to-date return of 26.7% as of Feb. 16.

On top of that, the third and fourth top-performing European funds this year both hail from Eastern Europe -- the tiny $2 million (PTEEX Quote)Pictet Eastern European fund with a 6.4% return year-to-date and the small $4 million (EUROX Quote)Regent Eastern European fund with a return of 4.58% so far this year. Meanwhile, the average European fund is down 5.48% for the year, according to Morningstar. ...