2 International Funds That Have Gotten Riskier

The turbulent start of 2025 has made it challenging for some non-US stock funds to find their footing after three years that were not lacking in other kinds of turmoil.

Trade wars have roiled global markets this year, but international markets have been no stranger to risk. After Russia invaded Ukraine in 2022 and as inflation persisted through the three-year period, some international-equity funds that had been regarded as steady performers in their peer groups saw their risk measures increase and long-term records worsen.

Here’s a look at two strategies that Morningstar analysts still like despite their recent troubles.

Harding Loevner International Equity

Harding Loevner International Equity’s HLMNX risk, as measured by its three-year Morningstar Risk rating, is above average, partly because of its big helping of Chinese stocks. The fund ranked in the bottom quartile of the foreign large-blend Morningstar Category in 2024 and the bottom third of the foreign large-growth group, where it previously resided, in 2023. The portfolio, which had been overweight in China relative to peers at least since early 2019, felt the strain as the MSCI China Index fell by double digits in 2022 and 2023. That amplified the fund’s volatility.

The fund reduced its China exposure by late 2023, but the stake was still about double that of its typical peer.

The fund’s results have been mixed so far this year. In 2025 through April 9, its nearly flat results trailed about two thirds of the category. Its roughly 5.7% loss over the week ended April 9 was worse than about 60% of peers. The fund still has Above Average Process and People ratings for its well-credentialed team and disciplined quality-growth process.

Invesco Developing Markets

An overweight position in Russian stocks hurt Invesco Developing Markets ODMAX in 2022, and a bigger-than-average helping of Mexican stocks impeded it in 2024, when the Morningstar Mexico Index lost 26.2%—right after the fund had increased its stake there. The fund ranked in the bottom quartile of its diversified emerging-markets category in 2022 and 2024 and the third quartile in 2023. In the past three years, the fund’s volatility, as measured by standard deviation, has been above average.

The fund still gets Above Average ratings for People and Process because manager Justin Leverenz is experienced and knows the emerging markets very well. He also still has an impressive long-term track record—the fund never finished a year in the bottom quartile of its category in the first 13 years of his tenure. The fund’s year-to-date results through April 9, however, were not exceptional. The 4.4% loss for the strategy’s A shares was a bit better than average for the peer group, while its 8.8% drop for the week that ended April 9 was in the category’s bottom half.

A version of this article first appeared in the March 2025 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.