Retail investors are notorious for chasing performance, and they may be at it once again. Over the last three years, foreign mutual funds have posted annual returns twice those notched by the S&P 500, prompting investors to dump shares of U.S. stock funds and park that cash overseas in search of fatter returns. Indeed, during 2005 and 2006, more than 85 percent of all net inflows into equity mutual funds went to international funds, according to the Investment Company Institute. Foreign funds now comprise 22 percent of the $6 trillion in equity mutual fund assets, up from 14 percent at the end of 1999, ICI says. Maybe it's time to reverse course.
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