Legal Definitions - world fund

A world fund (also known as a global fund) is a type of mutual fund that invests in securities issued by companies located in various countries around the globe, including the fund's home country. Unlike an "international fund," which specifically excludes investments in the fund's home country, a world fund has the flexibility to invest in a broad spectrum of markets worldwide, offering investors exposure to diverse economies and industries.

Here are some examples to illustrate the concept of a world fund:

• Example 1: Individual Investor Seeking Broad Diversification

  Maria, an investor based in Canada, wants to diversify her investment portfolio beyond just Canadian companies. She chooses to invest in a world fund that holds stocks from companies in Canada, the United States, Germany, Japan, and Australia. This fund allows her to gain exposure to different global economies and industries without having to research individual companies in each country herself.

  Explanation: This illustrates a world fund because it invests in companies both within Maria's home country (Canada) and in numerous other countries (U.S., Germany, Japan, Australia), providing broad global diversification.

• Example 2: Retirement Plan Manager Seeking Global Growth

  The investment committee for a large corporate pension plan in the United Kingdom decides to allocate a significant portion of its assets to a world fund. Their objective is to ensure the pension fund's long-term growth by tapping into opportunities in both established markets like the UK and the Eurozone, as well as rapidly developing markets in Asia and Latin America, all within a single investment vehicle.

  Explanation: This demonstrates a world fund's utility for a large institutional investor seeking comprehensive global market exposure, including investments in its home country (the UK) and a wide array of other international regions.

• Example 3: Financial Advisor Recommending a Comprehensive Equity Solution

  A financial advisor recommends a world fund to a client who desires a single, diversified investment vehicle for their equity holdings. The fund's portfolio includes shares of technology giants from the United States, luxury goods manufacturers from France, pharmaceutical companies from Switzerland, and major banks from Australia. The fund's strategy allows it to shift allocations between these global markets based on economic conditions and growth prospects.

  Explanation: This scenario highlights a world fund's ability to provide diversified exposure across various sectors and geographies, including the fund's home country (if, for instance, the U.S. tech giants are in the fund's home country) and numerous other international markets, offering a comprehensive global equity solution.