What Is a Global Fund?
Let me explain what a global fund is: it's a fund that invests in companies located anywhere in the world, including your own country. As an investor, you should know that a global fund seeks to identify the best investments from a global universe of securities. These funds may also be passively managed.
A global fund can focus on a single asset class or allocate to multiple asset classes. That's the straightforward definition you need to grasp.
Key Takeaways
- A global fund is a mutual fund or ETF that invests in companies located anywhere in the world including the investor’s own country.
- Global funds seek to identify the best investments from a global universe of securities.
- A global fund might be focused on a single asset class or allocated to multiple asset classes.
Understanding Global Funds
You get a diversified portfolio of global investments with a global fund. Investing in international securities can increase your potential return, but it comes with some additional risks. A global fund can help mitigate some of those risks and fears you might have when considering international investments.
Around the globe, investment regions are described as developed markets, emerging markets, and frontier markets. Each category includes countries with their own characteristics and risks. Developed markets represent companies with mature economies and efficient infrastructures for financial transactions. Emerging markets often provide the greatest opportunity for return, as they are some of the largest and fastest-growing economies. Frontier markets offer the highest risk, being the least developed.
A global fund can invest in any region or country. It may choose a specific concentration or invest broadly across asset classes and countries. These funds come as closed-end mutual funds, open-end mutual funds, or exchange-traded funds (ETFs).
Global Fund Investing
You can expand your investable universe globally to seek greater returns, but investing in global securities increases risks. That's why global funds are a leading option: their diversified investments mitigate risk and allow identification of top-performing investments.
To manage risk while aiming for higher returns, you can invest in both global debt and equity funds or hybrid funds that cover both. Actively managed global funds are popular, but passively managed index funds also provide broad market exposure with diversification benefits.
Global Debt
In the global debt category, there are many funds, but consider these high-profile ones: the Vanguard Total International Bond Index Fund (VTABX), with over $91.9 billion in net assets as of late Q2 2022; the American Funds Capital World Bond Fund (CWBFX), with over $14.7 billion; and the PIMCO International Bond Fund (PFORX), with over $12.4 billion.
Each global debt fund has different features and allocations, but they all invest in diversified portfolios of U.S. and non-U.S. fixed-income securities.
Global Equity
In large-cap global equity, major funds include the American Funds New Perspective Fund (ANWPX), with net assets over $132.5 billion as of Q2 2022; American Funds Capital World Growth and Income Fund (CWGIZ) with $117 billion; and First Eagle Global Fund (SGENX), managing over $49 billion.
Global equity funds buy stocks domestically and worldwide, available in hundreds of combinations of philosophies, strategies, and styles.
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