The Wasatch International Growth Fund faced headwinds in the third quarter of 2025, recording a decline that trailed its benchmark. Key factors influencing this performance included specific investment choices in both developed and emerging markets. Despite these challenges, there remains a positive outlook for market trends to increasingly favor fundamental value, suggesting potential for recovery and improved performance in the future.
Amidst a complex global economic landscape characterized by fluctuating currency values and trade tensions, the Wasatch International Growth Fund encountered a challenging period, finishing with a return of -4.58%. This result underscores the difficulties faced in outperforming the market during this quarter, with specific regions contributing significantly to the underperformance. The broader international equities market, however, saw some support from a weaker U.S. dollar and accommodative monetary policies in Europe and parts of Asia, creating a mixed operational environment for global funds.
Understanding the Quarterly Performance
In the third quarter of 2025, the Wasatch International Growth Fund's Investor Class (WAIGX) saw a noticeable decrease of -4.58%, falling short of its comparative index. This decline was largely influenced by the fund's investment decisions within specific geographic markets. Analysts point to stock choices made in Japan and Canada as primary factors, which together presented the most significant drag on the fund's relative returns against the benchmark. The economic atmosphere during this period was complex, with international developed equities receiving some benefit from a softer U.S. dollar and supportive monetary policies across Europe and parts of Asia, yet this positive momentum was tempered by persistent worries about the impact of tariffs on global trade, contributing to an environment of cautious sentiment among investors.
Further detailed analysis reveals that beyond developed markets, the fund's strategy in emerging economies also played a role in its quarterly performance. Specifically, stock selection within India was identified as another major contributor to the relative underperformance. This suggests that while global economic shifts provided a backdrop, the specific stock-picking methodologies in these key regions were critical in shaping the fund's outcomes. The lingering uncertainty surrounding global trade policies, particularly the potential effects of tariffs, continued to exert downward pressure on investor confidence, creating a difficult landscape for active fund management to navigate successfully. Despite these setbacks, there is an underlying belief within the fund management team that market dynamics might evolve to better reward companies with strong underlying fundamentals, offering a glimmer of hope for future periods.
Future Outlook and Market Dynamics
Looking ahead, the management of the Wasatch International Growth Fund expresses a degree of optimism, holding out hope that the market's focus will increasingly shift toward fundamental analysis. This anticipated trend, if it materializes, could provide a more favorable environment for the fund's investment philosophy, which prioritizes companies with strong intrinsic value. The current market, often swayed by macroeconomic factors and speculative trends, may gradually move towards a phase where corporate fundamentals become the primary drivers of stock performance. This shift would allow the fund's carefully selected portfolio companies, chosen for their robust business models and growth prospects, to gain better recognition and appreciation in valuation, thereby enhancing the fund's overall returns.
This hopeful expectation is rooted in the belief that periods of market volatility and uncertainty often lead investors to seek refuge in more stable, fundamentally sound companies. Should the trend towards recognizing these fundamentals broaden, as the fund managers anticipate, it would likely mitigate the impact of external economic pressures and tariff-related anxieties that have previously weighed on sentiment. A renewed emphasis on corporate earnings, balance sheet strength, and sustainable growth trajectories could empower the fund's holdings in various international markets to deliver stronger results. Such a market environment would align more closely with the fund's long-term investment strategy, potentially reversing the underperformance experienced in the recent quarter and paving the way for more consistent and competitive returns going forward.
