Legal Definitions - international fund

An international fund is a specific type of mutual fund that primarily invests in securities, such as stocks and bonds, of companies or governments located outside the investor's home country. While a general mutual fund pools money from many investors to buy a diversified portfolio of investments, an international fund specifically focuses this investment strategy on foreign markets. This allows investors to gain exposure to global economies and companies without having to directly purchase individual foreign securities themselves.

Here are some examples to illustrate the concept of an international fund:

• Example 1: Diversifying a Retirement Portfolio

  A software engineer in California, looking to diversify her retirement savings, decides to invest a portion of her 401(k) in an international fund. This particular fund focuses on established companies in developed European markets, such as German industrial firms, French luxury brands, and Swiss pharmaceutical companies. By investing in this international fund, she gains exposure to economic growth and company performance outside the United States, potentially reducing her overall risk by not being solely dependent on the U.S. economy, and benefiting from opportunities in other parts of the world.

• Example 2: Accessing Emerging Markets

  A financial advisor recommends an international fund specializing in emerging markets to a client in Australia who is seeking higher growth potential. This fund invests in companies operating in rapidly developing economies across Asia, Latin America, and Africa. The fund might hold shares in a growing technology company in India, a major bank in Brazil, or a manufacturing firm in Vietnam. This allows the Australian investor to participate in the economic expansion of these regions, which might offer different growth trajectories compared to more mature markets, all managed through a single investment vehicle.

• Example 3: Global Sector-Specific Investment

  A charitable foundation based in the United Kingdom wants to invest in the global renewable energy sector. Instead of researching and buying individual stocks of solar panel manufacturers in China, wind turbine developers in Denmark, and electric vehicle battery producers in South Korea, the foundation invests in an international fund dedicated to global clean energy. This fund provides them with a professionally managed, diversified portfolio of companies worldwide that are involved in renewable energy, aligning with their investment goals while spreading their risk across multiple international markets and companies within that specific industry.