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What is a Global Fund?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 25 November 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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A global fund is a mutual fund which holds investments all over the world. Also known as world funds, global funds have very diverse investments which are designed to insulate the fund from risks by ensuring that market pressures in one nation do not unduly affect the value of the fund as a whole. People who invest with global funds can increase the diversification of their portfolios, although a global fund should not be used as the sole investment vehicle for funds.

It is important to distinguish between a global fund and an international fund. A global fund truly invests globally, with at least 25% of the portfolio being invested in nations other than the home nation of the fund. International funds, by contrast, invest entirely outside the home nation of the fund, with no investments domestically. These differences in structure can lead to differences in reliability and performance and these funds are treated in very different categories because of the difference in their investment approach.

Usually the portfolio of a global fund is organized with a higher percentage of stocks with a known and recognized performance history. The fund chooses sound and reliable stocks to create the backbone of the portfolio to provide additional insulation from market volatility. Working entirely with lesser stocks could potentially be more profitable, but it also carries much more risk because these stocks could crash in value just as easily as they rise.

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The activities of a global fund are informed by numerous researchers who work around the world monitoring financial situations and helping with the selection of stocks and securities. These researchers monitor ongoing political situations for warning signs which might indicate that it is time to move investments out of a country, and they also run market projections and perform other tasks which are designed to provide as much information as possible about potential investments. Decision-making requires balancing input from numerous sources to ensure that the wisest purchases possible are made.

People who are interested in investing with a global fund can talk with a finance adviser to get information about currently operating funds and sound buys. Ratings and reviews of mutual funds are also published in numerous magazines targeted at investors and members of the financial industry. As always, it is important to remember to diversify a portfolio so that declines in value in one or more investments do not drag the entire portfolio down.

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