DEFINITION of 'World Fund'
A mutual fund that invests in securities from several different countries, including the United States. World funds typically have a significant portion of their capital invested in U.S.-listed securities, but also spread their investment capital among securities from several other countries. This structure limits exposure to any specific country and limits exchange rate risks.
BREAKING DOWN 'World Fund'
It's important to not confuse "international funds" with "world funds". International funds invest exclusively in securities from countries outside of the United States, while world funds can have up to 75% of their capital invested in U.S. securities.
In contrast, "country funds" are mutual funds that limit their investments to securities from one particular country. The common argument for the benefits of world funds is that, while still based on the U.S. market, world funds allow their managers to select the best securities out of the global marketplace, instead of being limited to selecting only from a given country and missing out on potentially better investments.