What is the difference between a global fund and an international fund?

By Investopedia Staff AAA
A:

In the English language, "global" and "international" tend to be used interchangeably - hence the confusion in the investing world when we are told that global and international funds have completely different investment goals and provide investors with different kinds of investing opportunities.

Global funds consist of securities in all parts of the world, including the country in which you reside. Think of a globe, which displays every single country. Global funds are chosen primarily by investors who wish to diversify against country-specific risk without excluding their own country. Such investors may already have a lower than desired concentration of domestic investments or may not want to take on the high level of sovereign risk involved in making foreign investments.

International funds consist of securities from all countries except the investor's home country. These funds provide diversification outside of the investor's domestic investments. If an investor currently holds a portfolio consisting mainly of domestic investments, he or she may choose to diversify against country-specific risk and purchase an international fund. Alternatively, a speculator may invest in an international fund because he or she anticipates a rise in a particular foreign market.

For an introduction to mutual funds, check out this mutual fund basics tutorial.

RELATED FAQS

  1. What are the best ways to lower my investing fees?

    Lower your investing fees by buying index funds or ETFs, choosing the right mutual fund share class, evaluating breakpoints ...
  2. What is the difference between a 401(k) plan and a 403(b) plan?

    Administered by for-profit, private companies, 401(k) plans are more common than the nonprofit or government-sponsored 4 ...
  3. What is a BRIC nation?

    BRIC is an acronym for the combined economies of Brazil, Russia, India and China. The economies of these four nations are ...
  4. Is it a good idea to buy mutual funds from banks?

    Mutual funds offer consumers a great way to access a professionally-managed group of assets at a relatively low cost, with ...
RELATED TERMS
  1. Foreign remittance

  2. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  3. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann ...
  4. Heckscher-Ohlin Model

    An economic theory that states that countries export what they ...
  5. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...
  6. Product Portfolio

    Investopedia explains: A Product Portfolio is the collection ...
comments powered by Disqus
Related Articles
  1. Will ETFs Eventually Replace Mutual ...
    Mutual Funds & ETFs

    Will ETFs Eventually Replace Mutual ...

  2. Iraqi Dinar: Can Comparables Guide Investment?
    Fundamental Analysis

    Iraqi Dinar: Can Comparables Guide Investment?

  3. 5 Smart Money Strategies From Around ...
    Savings

    5 Smart Money Strategies From Around ...

  4. Understanding The Bond Behemoth That ...
    Mutual Funds & ETFs

    Understanding The Bond Behemoth That ...

  5. Alternatives To Pimco's Total Return ...
    Bonds & Fixed Income

    Alternatives To Pimco's Total Return ...

Trading Center