Q. What’s the difference between a global mutual fund and an international mutual fund?
A. There’s one major difference between global and international funds, but it’s an important one when you’re trying to determine the best overall asset allocation for your portfolio.
Global mutual funds consist of securities in all parts of the world, including the country in which you reside, said Brian Power, a certified financial planner with Gateway Advisory in Westfield.
“Think of a globe which displays every single country,” Power said. “Global funds are chosen primarily by investors who wish to diversify against country specific risk without excluding their own country.”
Then there are international mutual funds, which consist of securities from all countries except the investor’s home country, Power said.
“These funds provide diversification outside of the investor’s domestic investments,” he said. “If an investor currently holds a portfolio consisting mainly of domestic investments, he or she may choose to diversify against country-specific risk and purchase an international fund.”
Hope that helps in your quest for better diversification!
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