International stocks were one of the main investment options that many argued you need a top notch manager to effectively invest in. Au contrair! MarketWatch reported in September on a July Standard & Poor study comparing the 5 year returns on International Index managed funds and index funds and this report bears repeating here. Nearly 60-65% of Index Funds outpaced their Managed equivalents. Now the odds are better that you can find an actively managed international fund that outperforms the benchmark than you can find an actively managed US fund that does, but the odds are still not in your favor. An interesting Journal of Financial Planning article from 2002 had found that Small Cap and International Funds outperformed the benchmark index, but this is not reflected in the more recent S&P report.

Disclaimer: I’m biased towards Index Funds. I do own several managed funds through my 401K and I have purchased only the Columbia Acorn fund of my own free will back in Jan 2002 (it has been a pleasure to own). However, I’m of the opinion that the only thing each of us can actively control about the funds and indexes we invest in is their load and expense ratios. Managers and investment strategies can shift, and even when they don’t, no one has a hot hand indefinitely and knowing when their selection skills have definitively soured is difficult (especially when you’re accustomed to trusting in the skills of this manager and following them through normal draw-downs).