With the US continuing to muddle along with relatively anemic growth, an allocation to international markets has become an increasingly important component of total return. Although US equities represented 72 percent of global stock market value in 1960, that number has fallen to around 40 percent in recent years. Investors who continue to eschew overseas plays are making a costly mistake in terms of both growth and diversification.

Fortunately, Thomas White International (TWWDX) offers exposure to both developed and emerging markets, while keeping a lid on volatility. The fund’s seasoned management uses a fundamental approach to security selection to identify stocks trading at a discount to their intrinsic value.

Despite its value orientation, management’s relative value approach means that its holdings can also include growthier fare. For example, Morningstar classifies nearly a third of the fund’s holdings as growth stocks, while a similar proportion falls in the blended zone between growth and value. And though the fund is dominated by large-cap names, it has a sizable 17.4 percent allocation to mid-cap names.

One of the fund’s key attractions is its substantial 23.6 per- cent allocation to emerging market equities, which is far greater than the 3.9 percent allocation of its category peers. While that weighting can help produce out- size gains during bull runs, it can also weigh on the fund’s shorter- term performance during down- turns. Even so, the fund’s largest rolling 12-month loss during the Great Recession was barely more than a percentage point worse than the average fund in its category.

The fund has earned a ranking within the top 11 percent of its category in five of the past 10 calendar years. It ranks in the top 10 percent over the trailing five-year period and in the top 3 percent over the trailing 10-year period.

And the fund’s 8.5 percent annualized return over the trailing 10-year period beat its category peers by a substantial 3 percentage points per year. Although the fund’s risk is in line with both its benchmark and its category, its overall performance was nevertheless strong enough to beat both on a risk-adjusted basis by a similarly wide margin over that same period.

In addition to security selection, credit for the fund’s risk- adjusted performance is due to a well-diversified portfolio of 137 holdings, with just 18.3 percent of assets concentrated in its top 10 holdings.

Although the fund’s financial services weighting has been a drag on returns in recent quarters, China Citic Bank Corp (Hong Kong: 0998, OTC: CHBJF) was its top-performing holding during the fourth quarter, with a 35.7 percent gain. Management attributed this performance to investors becoming less concerned about the potential for nonperforming loans to plague China’s banking system.

Management’s outlook toward emerging economies remains sanguine largely because developing nations’ relatively strong financial position affords them greater flexibility to stimulate their economies via fiscal measures as well as monetary easing.

For those who want an active management approach to overseas investments, Thomas White International offers exposure to the full gamut of foreign markets.