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. How often do mutual funds report their holdings?

    Learn how mutual funds are required by the Securities and Exchange Commission to disclose their portfolio holdings on a quarterly ... Read Answer >>
  2. Should mutual funds be subject to more regulation?

    Understand whether mutual funds need stricter regulation. Learn what types of current and future regulations have been put ... Read Answer >>
  3. How do you find out the price of a mutual fund?

    The easiest way to find out the price of a mutual fund is to look at its net asset value (NAV). NAV is the total value of ... Read Answer >>
Related Articles
  1. Financial Advisor

    A Mutual Funds Guide for Young Investors

    Learn how mutual funds work, why they are so popular and how younger investors can get started by putting mutual funds in their IRAs or 401(k)s.
  2. Investing

    4 Mistakes to Avoid When Choosing Mutual Funds to Invest in

    Mutual funds are a great way to build wealth but not all of them are the same. Investors have to be mindful of fees, turnover, redundancy and performance.
  3. Financial Advisor

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  4. Investing

    Mutual Fund Basics Tutorial

    Learn about the basics - and the pitfalls - of investing in mutual funds.
  5. Investing

    The Advantages Of Mutual Funds

    Learn how to get diversification, liquidity and professional management at an affordable price.
  6. Financial Advisor

    How to Rate Your Mutual Fund Manager

    What to really look for when you're deciding on a mutual fund.
  7. Investing

    Mutual Funds Are Awesome - Except When They're Not

    This investment is very popular, but that doesn't mean it comes without risk.
  8. Investing

    Trading Mutual Funds for a Living: Is It Possible?

    Find out why trading mutual funds for a living isn't your best bet, including how funds discourage short-term trading and which options may better serve you.
  9. Investing

    How liquid are Fidelity mutual funds?

    Review the liquidity features of mutual fund shares and an overview of Fidelity mutual funds. Most investors look for convenient access to their investments.
  10. Financial Advisor

    Mutual Funds: How Many is Too Many? (VTSMX, VBMFX)

    How many mutual funds are too many when it comes to a well diversified portfolio?
RELATED TERMS
  1. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  2. Foreign Fund

    A mutual fund, closed-end fund or exchange-traded fund that invests ...
  3. No Transaction Fee Mutual Fund

    A mutual fund that is offered to investors by a brokerage firm ...
  4. International Fund

    A mutual fund that can invest in companies located anywhere outside ...
  5. Exchange-Traded Mutual Funds

    Investopedia explains the definition of exchange-traded mutual ...
  6. Fund Supermarkets

    An investment firm or brokerage that offers investors a wide ...
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center