Last week, the Department of Labor reported that the Consumer Price Index (CPI) had increased 0.2% month over month in June against the consensus estimate of 0.3%, after rising 0.1% in May. Core CPI rose 0.2%, after increasing 0.4% in May. The very next day, the Producer Price Index (PPI) came in at a 0.1% increase for June. Core PPI decreased by 0.2% from May.

With both consumer and producer-side inflation now showing clear signs of slowing down, that too over a period of time, there is a growing consensus that the Federal Reserve might be compelled to bring an end to its current rate hike cycle. It is worth remembering that the rate-hike pause announced by the Fed in its June meeting was on the pretext that the officials would want to go through further economic data before taking a call.

In such an environment, global equity funds have continued to receive inflows as fears of an impending recession have eased. With inflation going down, investors are expecting the central bank to loosen its grip on the monetary policy and thus facilitate the economy into a soft landing.

The need to diversify one’s portfolio in uncertain times over geographies and territories has directed investors to venture into the European and Asian markets. As of Jul 12, global bond funds posted their third weekly inflow in the week thanks to receding fears of inflation. Among the global equity funds, Asian and U.S. funds received $1.9 billion and $120 million, respectively, in inflows. Emerging markets did well, with an inflow of $854 million. Sectorally, tech and consumer staples attracted the maximum investment, with $1.4 billion and $287 million, respectively, while energy returned a net outflow.

Despite currency exchange rate risks, global equity funds seem lucrative for investors at this juncture as it is opening up emerging markets for them. Europe seems to have felt the heat, though, with net outflows of $6.6 billion last week.

In summary, global equity funds provide the much-required diversification and growth potential in a market that is expected to remain volatile for a while. Hence, astute investors should consider such funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have thus selected three global equity funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000 as well as carry a low expense ratio.

Hotchkis & Wiley Global Value Fund HWGAX seeks to invest most of its net assets in companies around the world, including the United States. HWGAX advisors primarily invest in developed countries but may also invest in emerging markets.

Scott Rosenthal has been the lead manager of HWGAX since Dec 30, 2012. The three top country weights for HWGAX are 62.7% in the United States, 6.6% in France and 6.5% in the United Kingdom.

HWGAX’s 3-year and 5-year annualized returns are 18.9% and 4.9%, respectively. Its net expense ratio is 0.95% compared to the category average of 1.07%. HWGAX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Victory RS Global Fund RGGCX invests in common stocks, preferred stocks, and other securities of publicly traded companies globally. RGGCX normally invests in at least three different countries, including the United States.

Adam Mezan has been the lead manager of RGGCX since Apr 30, 2018. The three top country weights for RGGCX are 58.2% in the United States, 5.3% in Japan and 4.9% in Canada.

RGGCX’s 3-year and 5-year annualized returns are 11.4% and 9.6%, respectively. Its net expense ratio is 0.55% compared to the category average of 0.95%. RGGCX has a Zacks Mutual Fund Rank #1.

American Century Global Small Cap Fund AGCVX typically invests the majority of its net assets in securities issued by small-cap companies. AGCVX considers small-cap companies to include companies with market capitalizations not greater than that of the largest company on the MSCI ACWI Small Cap Index. The fund invests in countries globally, including the United States, foreign developed countries, and emerging markets.

Federico D. Laffan has been the lead manager of AGCVX since Mar 28, 2016. The three top country weights for AGCVX are 54.6% in the United States, 9% in Japan and 6.6% in Canada.

AGCVX’s 3-year and 5-year annualized returns are 10.3% and 7.6%, respectively. Its net expense ratio is 1.11% compared to the category average of 1.26%. AGCVX has a Zacks Mutual Fund Rank #1.

PMC Diversified Equity Fund PMDEX normally invests the majority of its net assets in equity securities issued by companies of all sizes. PMDEX invests in foreign securities, including American Depositary Receipts, European Depositary Receipts, and Global Depositary Receipts. The fund also operates in emerging markets.

Janis Zvingelis has been the lead manager of PMDEX since Jan 1, 2015. The three top country weights for PMDEX are 68.4% in the United States, 6.4% in Japan and 4.1% in the United Kingdom.

PMDEX’s 3-year and 5-year annualized returns are 11.5% and 6.2%, respectively. Its net expense ratio is 0.68% compared to the category average of 0.95%. PMDEXhas a Zacks Mutual Fund Rank #2.

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