For the longer run, we believe foreign developed markets, especially much of Continental Europe and Japan, face headwinds that will restrain growth and, thus, stock prices, asserts Mark Salzinger, editor The No-Load Fund Investor.

Therefore, we suggest that investors underweight foreign developed markets, at least in relation to what financial history would suggest and some big fund providers include in their asset-allocation products.

On the other hand, we do see more growth potential and more attractive valuations in some emerging markets, and in smaller companies throughout the developed and (mostly) the emerging world.

One example is India. With a reformist leader and an entrepreneurial tradition, it is an interesting market at recent prices. Mutual fund investors may want to consider Matthews India (MINDX), while those who prefer ETFs can try iShares MSCI India (INDA).

Meanwhile, Mexico, pummeled by Donald Trump’s election and subsequent threats, has seen its currency and equity market tumble since the election.

iShares MSCI Mexico (EWW) has become an attractive speculation, as it could rebound smartly if the reality of its relationship with the U.S. during the current presidential administration turns out less badly than the expectation.

For broader exposure in the emerging markets, we prefer mutual funds that emphasize them but invest in smaller, niche companies with good growth potential such as the Grandeur Peak Funds.

Grandeur Peak Global was founded in 2011 by three former high-level executives at Wasatch Advisors, including Robert Gardiner, well-known as one of the country’s best small-cap managers with a global approach.

The firm’s largest fund by assets, International Opportunities (GPIOX), has outperformed the vast majority of international equity funds over its existence, but it is closed to new investors.

However, two of the firm’s funds remain open: International Stalwarts (GISOX) and Global Stalwarts (GGSOX). Both of these funds emphasize Grandeur Peak’s favorite 75 to 125 stocks with market caps of at least $1.5 billion. The median market capitalizations of the firm’s other funds are well below this level.

In essence, the Stalwart funds represent Grandeur Peak’s favorite stocks that may, or already have, outgrown their other funds, but that may be growing slightly slower than the 15% hurdle generally required.

While many of these stocks no longer fit a small- or micro-cap mandate, they continue to offer good growth potential as well as more ballast available during potentially tough times, thanks to strong balance sheets.

Performance of the Stalwart funds has been excellent during their short lives. Over the 12-month period ended Jan. 31, 2017. The duo gained 17% (International Stalwarts) and 19.7%, respectively, beating the majority of their international and global peers.

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