A:

That depends. It is possible for you to buy a mutual fund issued in a country other than the United States; however, the mutual fund still needs to be registered with the SEC. This is the reason why many investors are turned away by foreign mutual funds. Typically, the foreign fund companies will choose not to market to the U.S. because they are able to sell enough of their mutual fund within domestic markets.

However, there is one exception to this registration requirement. If the mutual fund you are trying to purchase is privately issued to less than 100 people in the U.S. or is only issued to sophisticated investors who are considered qualified or accredited investors, then the registration requirement is waived.

It is also important to note that this mandatory registration extends to brokerage firms. If a foreign firm does not wish to register as a broker with the SEC, then that firm cannot legally do business with U.S. residents or U.S. residents living abroad. Once again, brokerages may decide not to register simply for business reasons, as marketing to U.S. clients may not be lucrative enough for the foreign firm to register with the SEC.

RELATED FAQS

  1. Is there a situation in which wash trading is legal?

    Learn about what wash trading is and how it can affect the value of a stock. Explore the difference between wash trading ...
  2. What action is the SEC likely to take on 12b-1 fees?

    Read about what actions the SEC may take with regard to 12b-1 fees, and for what purposes these types of fees can be used ...
  3. What is the difference between a greenfield investment and a regular investment?

    Learn how greenfield investments can be advantageous for multinational corporations, and discover the disadvantages they ...
  4. What is considered a reasonable 12b-1 fee?

    Learn what is generally considered to be a reasonable 12b-1 fee, what these fees are charged for and how these fees are regulated.
RELATED TERMS
  1. Optimal Currency Area

    The geographic area in which a single currency would create the ...
  2. European Sovereign Debt Crisis

    A period of time in which several European countries faced the ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Dividend

    A distribution of a portion of a company's earnings, decided ...
  5. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  6. Historic Pricing

    A method for calculating the value of an asset using the last ...

You May Also Like

Related Articles
  1. Investing News

    How China's Lenovo Makes Money

  2. Investing Basics

    Is Lenovo A True Disruptor Of The Laptop ...

  3. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Singapore

  4. Mutual Funds & ETFs

    ETF Analysis: Vanguard MSCI EAFE

  5. Forex Fundamentals

    How Petrodollars Affect The U.S. Dollar

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!