Posted in Finance, Accounting and Economics Terms, Total Reads: 408
Definition: Global Fund
Global Fund is basically a mutual fund where the fund manager can invest in stocks and debt but not only in the home country but anywhere else in the world. IT is closed-end fund or can be a exchange traded fund which can be invested anywhere in the world and is not limited to the home country. It is a type of mutual fund.
So let us understand what a mutual fund is , basically it is type of investment vehicle which is made up of many types of funds collected from various investors for the purpose of investing in securities like stocks, bonds, money market instruments etc. these mutual funds are managed by persons called as fund managers who invest the fun’s capital in various securities with the aim of getting some capital gains.
As the funds operate and invest across the globe, this fund provides a huge amount of diversification and also this is sometimes used as a hedge against exchange rate and also inflation. Some of the risks associated with global fund are economic and political fluctuations. These factors affect the security of that particular country and would inadvertently affect the complete fund.
Many people confuse the Global fund with the International fund, the main difference between the two is that while Global fund managers can invest anywhere in the world including the home country, the International fund managers cannot invest in home country but can invest in any other country around the globe. Global funds are chosen by investors who want to diversify country specific risk, but also ensuring that their own country is not excluded.