Investing in international equity markets has emerged as a lucrative option for investors, most of whose portfolios consist entirely of domestic securities. Around half of the world’s equity market capitalization is made up by international equity markets. Emerging markets, which continue to grow at a rapid pace despite the slowdown in developed economies, are of particular interest for those looking at appreciably higher rates of return. However, such investments also carry unique risks and mutual funds provide a less risky means of exposure to this sector than stocks.

Below we will share with you 5 top rated international mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all international funds, investors can click here to see the complete list of funds.

Fidelity International Small Cap Opportunities (FSCOX) seeks capital appreciation. The fund primarily invests in foreign securities, including those issued from developing nations. It focuses on investing in companies whose market capitalizations do not exceed $5 billion. The international mutual fund has a three year annualized return of 29.6%.

The international mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.06% compared to a category average of 1.59%.

Sentinel International Equity A (SWRLX) utilizes at least 75% of its assets to purchase foreign equity securities. Though the fund focuses on investing in developed nations, up to 25% of its assets may be invested in emerging markets. The international mutual fund has a three year annualized return of 20.72%.

Katherine Schapiro is the fund manager and he has managed this international mutual fund since 2005.

GMO Foreign Small Companies III (GMFSX) seeks total return which exceeds that provided by its benchmark, the S&P Developed ex-U.S. Small Cap index. The fund invests the majority of its assets in small companies with economic linkages to foreign countries. The international mutual fund has a three year annualized return of 27.98%.

As of November 2011, this international mutual fund held 231 issues, with 1.67% of its total assets invested in CIA Hering SA.

Alliance Bernstein International Growth A (AWPAX) primarily invests in equity securities issued by foreign companies from various market sectors. The fund usually invests in 90-130 companies located in three different countries at any given time. The international mutual fund has a three year annualized return of 23.95%.

The international mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.30% compared to a category average of 1.45.

Columbia International Value A (NIVLX) seeks capital appreciation over the long term. The fund invests at least 65%of its assets in companies outside the U.S. with a market capitalization of more than $1 billion. Not more than 5% of its assets may be invested in s a single instrument. The international mutual fund has a three year annualized return of 14.98%.

Jeffrey Germaine is the fund manager and he has managed this international mutual fund since 2009.

To view the Zacks Rank and past performance of all international mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.

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