25 Apr Options for overseas investing

Q. What’s the difference between emerging markets and international and global mutual funds?
— Investor

A. There are important differences, and getting it wrong may have a negative impact on your asset allocation or your wishes in terms of risk for your portfolio.

International and global funds are very similar, said Alison Williams, a certified financial planner with Stonegate Wealth Management in Oakland.

“Global funds hold securities from all parts of the world, including the country you’re in,” Williams said. “They’re often purchased to diversify while avoiding the high level of risk associated with foreign investments.”

Williams said international funds consist of securities from all countries except the country you’re in.  These are often purchased to diversify non-domestic investments or take advantage of an investor hunch regarding a foreign market, she said.

Then there are emerging market funds.

“These tend to have superior growth possibilities, but involve taking quite a bit of risk,” Williams said. “These funds are linked to developing countries, which by nature, are vulnerable to political and economic instability.”

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This post was first published in April 2016.