According to data from the Investment Company Institute (ICI), international mutual funds received $14.9 billion from investors in July. During the same month, investors withdrew $4 billion from domestic funds.

So what's causing this overseas migration of American investment dollars?

It is likely a mixture of two factors: the tempting returns international funds have posted recently and increased fear surrounding the weakening dollar. Is this something to pounce on right away?

Don't tread so fast, tiger
The fact is that folks who have not been invested abroad have missed out on heady gains in recent years (and the MSCI EAFE Index is another 1.2 percentage points ahead of the Dow year to date). And that's a trend we can expect to continue given slowing domestic growth and accelerating growth abroad.

So, then, are international funds the best bet for your investment dollars?

Yes and no.

Thanks for the non-answer
OK, I realize I responded like a politician there. To clarify: International funds shouldn't be ignored altogether. There's a good deal of money to be made from overseas companies. But looking at the past returns of international funds is not the way to take advantage of this foreign potential.

Therefore, if you find yourself salivating over the alluring returns of international funds, be cautious for two reasons:

  1. The returns will appear larger than they are because of the currency effect.
  2. Performance-chasing will only disappoint you in the end because, odds are, rising valuations mean you've missed out on the biggest gains.

Stick to the basics
Rather than blindly chasing short-term performance, these traits should dominate your fund-picking strategy:

  • Low expense ratios
  • Proven, experienced managers
  • Strong vision for the future.

These requirements, coupled with a long-term buy-and-hold mentality, will prove to be much more successful for your money than the strategy used by performance-chasers.

One Champion-ranked global fund that is an accomplished example of this strategy is Polaris Global Value (PGVFX). It carries a below-average expense ratio of just 1.23% and has been under the same management for almost 10 years. Here, your money rests in competent hands that have brought investors a nearly 23% annualized return over the last five years.

As a global stock fund, it invests in well-known domestic companies such as Verizon (NYSE:VZ), General Dynamics (NYSE:GD), and Capital One (NYSE:COF), as well as international companies such as BHP Billiton (NYSE:BHP), Cemex (NYSE:CX), and SK Telecom (NYSE:SKM), providing you with strong investment choices domestically and abroad.

A tried-and-true fund like Polaris Global Value stimulates the Foolish fund community and rewards us with above-average growth. In fact, since our Champion Funds newsletter began, our picks have a 16-percentage-point lead on the market's performance. These recommendations -- which include a handful of top-notch international funds -- are at your disposal with a free 30-day trial to the service. There's no obligation to subscribe.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.