Foreign funds aren't looking too good right now, but a solid one can boost returns and slacken risk. So let's do some shopping.

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Funds that invest overseas typically keep about 55% of their money in European stocks and about 20% in Asian stocks, with the remainder sprinkled in Latin America and elsewhere. These funds are typically used to diversify your portfolio of domestic stock funds. The idea,

explored in a recent column, is that foreign stock prices tend to rise and fall in different cycles than stocks trading in the U.S. Of course, as the world has gotten smaller, the correlation between U.S. and foreign markets has tightened somewhat. Last year, for instance, the

S&P 500

fell 9.1% and the average foreign stock fund skidded 15.5%, according to

Morningstar

.

And the U.S. market's dominance in recent years has left foreign funds' gains looking like small potatoes. Over the past 10 years, the average foreign fund has had a 7.7% annual gain, a little less than half the S&P 500's return. (Keep in mind, these are foreign funds, which invest primarily overseas, not global funds, which invest in both U.S. and foreign stocks.)

But even in such an unflattering period, the case can be made for foreign funds. A portfolio with 90% of its money in the

(VFINX) - Get Report

Vanguard 500 Index fund and 10% of its money in the venerable

(TBGVX) - Get Report

Tweedy Browne Global Value fund would've topped a strictly domestic portfolio over the past one-, three- and five-year periods, according to Morningstar.

The two portfolios each averaged a 15.2% annual gain over the past 10 years. Aside from solid returns, the portfolio with foreign exposure also would've been less volatile over the past 10 years.

International Flavor
Adding a slice of Tweedy Browne Global Value to a diversified portfolio would've helped you on the upside and the downside

Source: Morningstar. Annualized Returns through May 1.

So, if the U.S. market's current malaise is giving you wanderlust, let's look for some solid options. We sifted the 353-fund foreign pack, yanking out funds that didn't beat their average peer over the past three- and five-year periods, as well as those that are closed to new investors. We also tossed out funds with expenses above the category's 1.67% average, a manager who'd held the reins for less than five years or a minimum investment north of $10,000. Here's a list of top-10 funds that made the cut, ranked by their average annual gains over the past five years.

While many of these funds, like their domestic counterparts, were smacked by the tech and telecom sectors' implosion over the past year, you'll find a host of high- and low-octane choices on our list.

Pilgrim

has a broker-sold fund from each camp on the roster, with the aggressive

(NIGRX)

Pilgrim International Small Cap Growth fund and the more moderate

(NIVAX)

Pilgrim International Value fund.

The Pilgrim International Small Cap Growth fund, run by a team of

Nicholas Applegate

managers, essentially focuses on stocks of young, emerging companies with rising earnings growth. That's led to heady gains as the fund's 21% five-year annualized return beats 99% of its peers and leads the S&P 500 by more than five percentage points, but the fund's nearly 20% loss over the past year underscores the natural downside to a risky strategy.

The Pilgrim International Value fund, run by a team of managers at

Brandes Investment Partners

, charts a far less hectic course. The fund focuses strictly on companies that appear to be trading below what managers believe is their intrinsic value. That leads to a modest tech stake, but also solid gains. The fund beats at least 90% of its peers and the S&P 500 over the past one-, three- and five-year periods, according to Morningstar.

Two other solid funds with a price-conscious approach are the

no-load

(TBGVX) - Get Report

Tweedy Browne Global Value fund and the broker-sold

(SGOVX) - Get Report

First Eagle SoGen Overseas fund.

The Tweedy Browne fund's trio of managers -- brothers Chris and William Browne, along with John Spears -- have held the reins since the fund's 1993 inception. They copped Morningstar's prestigious Manager of the Year honor last year when they managed to ring up a 12.4% gain, compared with a 15% loss for their average peer.

The three pros strictly focus on companies they think are trading for less than their private market value. That has traditionally led to sizable stakes in the financial sector, where 23.5% of the fund's money lived at the end of April. Their strategy might not be exciting, but they beat at least 90% of their peers and the S&P 500 over the past one-, three- and five-year periods, according to Morningstar.

In running the First Eagle SoGen Overseas fund, co-manager Jean-Marie Eveillard and Charles de Vaulx follow a similar strategy but focus mainly on small- and mid-cap stocks -- just 4% of the fund is invested in big-caps. Because of their price-conscious ways, the pair typically has half the fund's money in industrial or financial stocks, but that hasn't worked out too badly. The fund beats at least 80% of its peers over the past one-, three- and five-year periods, according to Morningstar.

If you're more interested in a growth strategy, you might consider the no-load

(ARTIX) - Get Report

Artisan International fund, run by Mark Yockey since its 1995 inception. Yockey, Morningstar's Manager of the Year in 1998, focuses on stocks of companies with eye-popping earnings growth relative to their peers and the overall market. That's led to big bets on the often pricey tech and telecom sectors and an 18.4% annualized return over the past five years, which beats 98% of foreign funds and tops the S&P 500 by nearly three percentage points, according to Morningstar.

Of course, the fund's racy approach also led to its 14.7% drop over the past year. A less aggressive foreign fund with a growth style is the broker-sold

(AEPGX) - Get Report

EuroPacific Growth fund.

With $30.6 billion in its coffers, the fund is far and away the category's behemoth, but that hasn't slowed it down. The fund's management team shops for companies with solid earnings and a modest stock price relative to their industry peers, typically holding shares for years.

Although the fund had about a third of its money in the sagging tech and telecom sectors at the end of March, it still beats at least 70% of its peers over the past one-, three-, five- and 10-year periods, according to Morningstar. Its 12.4% average annual gain over the past 10 years beats 96% of its competitors. Why isn't the fund on our list? Its management tenure is left blank in

morningstar.com's

fund database.

Well, there you have it, a manageable menu of funds for those investors who want to broaden their horizons.

Fund Junkie runs every Monday and Wednesday, as well as occasional dispatches. Ian McDonald writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

imcdonald@thestreet.com, but he cannot give specific financial advice.