What Is a Global Fund?
A global fund is a fund that invests in companies located anywhere in the world including the investor’s own country. A global fund seeks to identify the best investments from a global universe of securities. Global funds may also be passively managed. A global fund can be focused on a single asset class or allocated to multiple asset classes.
Global Fund Explained
A global fund provides investors with a diversified portfolio of global investments. Investing in international securities can increase an investor’s potential return, with some additional risks. A global fund can help to mitigate some of the risks and fears investors may have when considering international investments.
Global Fund Offerings
Around the globe, investment regions are usually described as developed markets, emerging markets, and frontier markets. Each category includes countries with their own individual characteristics and risks. Developed markets represent companies that have mature economies and efficient infrastructures, specifically for financial market transactions. Emerging markets often provide the greatest opportunity for return, as they are some of the largest and fastest-growing economies in the world. Frontier markets will offer the highest risk, as they are the least developed.
A global fund can invest in any region or country in the world. It may choose a specific concentration or it may invest broadly across asset classes and countries. Global funds can be offered as closed-end mutual funds, open-end mutual funds, or exchange-traded funds (ETF).
Global Fund Investing
Investors can expand their investable universe globally to seek out greater returns but investing in global securities can also increase risks. Therefore, global funds provide a leading investment option because their diversified investments can mitigate risk and also allow for the identification of top-performing investments. To further manage risk while attempting to generate a higher return, investors can choose to invest in both global debt and equity funds or hybrid funds, which invest in both asset classes. Actively managed global funds are a popular choice for investors, however, passively managed index funds can also provide broad market exposure with diversification benefits.
As of January 17, 2018, the Prudential Global Total Return Fund reported one of the highest one-year performance returns in the global debt category. The Fund seeks to invest in a diversified portfolio of U.S. and non-U.S. fixed income securities. Its greatest allocation is to foreign government-related fixed income at 32.6%. By country, the Fund’s greatest investment allocation is in the United States at 37.3%. For the one-year period, the Fund has a return of 13.29%.
In large-cap global equity, the Oppenheimer Global Fund is reporting one of the category’s top returns with a one-year gain of 37.99%. The Fund invests in both U.S. and non-U.S. large-cap stocks. 46.7% of the Fund is invested in U.S. equities. By sector, the Fund has its greatest allocation in internet software and services at 8.8%.