What is the difference between global and international mutual funds? (2024)

FAQs

What is the difference between global and international mutual funds? ›

By definition, international funds invest in non-U.S. markets, while global funds may invest in U.S. stocks alongside non-U.S. stocks.

The difference between a global stock fund and an international fund is that the global stock fund invests in companies throughout the world, including the United States, whereas the international fund invests outside the United States.

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.

International funds are mutual funds or ETFs that invest in companies outside the investor's country of origin. Within emerging markets, investors will find funds that represent leading sub-segments such as the BRICS nations. Investing in international funds comes with the risk of currency volatility.

What Is Their Main Difference? We use both to refer to issues regarding all the places around the world, not just a specific country. However, 'global' is used to talk about issues concerning the whole world, whereas 'international' is used when we want to refer to two or more countries.

International funds invest only in foreign markets, excluding the United States. Global or world funds provide exposure to both foreign and U.S. markets. Regional funds invest primarily in a specific part of the world, like Europe or the Pacific region.

Example of International fund

Let's consider the Vanguard Total International Stock Index Fund. This fund tracks the performance of the FTSE Global All Cap ex-US Index, which represents the performance of mid, large, and small-cap stocks from emerging and developed markets outside of the United States.

Investing in global funds offers investors a diversified portfolio. Also, investing in global funds can increase potential returns and risk, as well. Some global funds are passively managed. The investment regions across the globe are categorised as developed markets, emerging markets, and frontier markets.

Global investing enables you to access investment opportunities that are not present domestically. Developed markets like the US are home to some of the world's largest tech companies – something you cannot access by investing in India.

As with any investment, international investing carries risks, including some unique to international markets, such as currency risk or changes to economic, political, or regulatory conditions.

What is the difference between global and international equity funds? ›

International equity funds invest in the stocks of companies located outside the United States, while global equity funds can invest in any market around the world.

The currency risk - being one of the advantage - can also become a disadvantage as fluctuations in exchange rates can impact the value of investments denominated in foreign currencies. Political and economic instability in foreign markets is another risk to investors.

Investing in international markets exposes you to political and economic risks in different countries. Factors such as government instability, regulatory changes, or economic downturns can impact the performance of international mutual funds. International markets can be more volatile than domestic markets.

Helps you diversify

Since global funds invest in a wide range of securities in several countries, the investment is truly diversified and does not carry concentration risk.

A global business is a company that operates facilities (such as factories and distribution centres) in many countries around the world. This is different from an international business, which sells products worldwide but has facilities only in its home country.