New York ( TheStreet) -- Investors have been dumping actively managed equity funds. In some cases, poor performances have discouraged shareholders.During the first nine months of this year, the average active domestic equity fund trailed the benchmarks by a wide margin, according to Morningstar, and shareholders withdrew $43 billion. But it is not clear why investors are shunning active international funds. During the first nine months, foreign funds outdid the MSCI EAFE benchmark, yet investors withdrew $9 billion. The strong showing of active foreign funds is not unusual. During the past 10 years, the average international stock fund returned 9.9% annually, outdoing the MSCI benchmark by more than a percentage point. Much of the performance gap can be attributed to the flexibility of actively managed international funds. While the MSCI has 20% of its assets in Japan, active funds are free to avoid the country. That has provided an advantage in an era when Tokyo markets have lagged badly. In addition, many active funds have over-weighted fast-growing emerging markets, regions that have recorded outsized gains in bull markets. Make no mistake, active funds can be volatile. Many suffered during the financial crisis. But some active funds have proved to be steady performers, limiting losses during the turmoil of 2008 and topping the benchmarks over the long term. A solid choice is Harding Loevner International Equity ( HLMNX). While the MSCI benchmark lost 5.6% annually during the past five years, the Harding Loevner fund about broke even and outdid 94% of peers. To limit risk, portfolio manager Alec Walsh sticks with companies that can grow consistently because they provide necessities. Holdings include food makers and producers of software that helps corporate customers manage costs. "Our holdings will not be hurt badly in weak economic times because the demand for the products is relatively resilient," says Walsh. He particularly likes software companies that have recurring revenues. A favorite holding is SAP ( SAP), a German supplier of business software. The company obtains steady income by charging fees for licensing and maintaining software. SAP has high returns on equity and is increasing revenues at double-digit annual rates. Another holding is ARM Holdings ( ARMH), a U.K. company that designs chips for smart phones and tablet computers. Charging licensing fees, ARM is recording strong revenue and earnings increases.