For foreign funds, do you think the index funds are better also? Has anyone done any study that shows foreign index funds consistently outperform active funds?

Originally posted in thread: 22736

Hello Newbie,

Basically, the same reasons that make passive management superior domestically work overseas too:
- lower fees
- no style drift
- Diversification
- (often) lower turnover (and therefore lower transaction costs and greater tax-efficiency)

You don't have to do any empirical studies to confirm that.

But in answer to your question, yes, here's a study on the benefits of passive investing in Emerging Markets.

I have no reason to believe that the Active-Passive debate should have any different answer for Intl asset classes than it does for domestic asset classes. For more info on the active passive question, see the studies here.

For more info on International Investing in general, see here.

For more info on Persistence studies in general, see here.

Eric E. Haas

Originally posted in thread: 22736

Hello Newbie,

I just happened to stumble past an Intl Persistence study. Unfortunately, to my knowledge it isn't available freely on the web.

William G. Droms and David A. Walker, "Performance Persistence of International Mutual Funds," Global Finance Journal, 12 2001, pp. 237-248.

They found no persistence past the one-year momentum effect found by many other studies.

Eric E. Haas

Originally posted in thread: 22736