If I am American, can I buy a foreign mutual fund?

By Investopedia Staff AAA
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. 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