What are the salient features of global funds?
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Investing in foreign stocks helps an investor widen his/her investment horizon. This can be used efficiently to diversify one’s portfolio.
A few salient features of global funds are:
- Global exposure – Global funds allows you to diversify your portfolio by investing in different stocks of different countries, providing global exposure to your portfolio.
- Risk diversification– Every country has different set of policies and market conditions. A diversified portfolio will help to reduce the risk factor of your overall portfolio, but one should keep in mind that changes in country specific policies can adversely impact a fund.
- Returns – Global funds are primarily suitable for long term investors and can give good returns in the long run. The returns offered by a global fund could vary based on multiple parameters.
- Currency – One should also keep in mind that global funds are exposed to currency fluctuations and it can impact the performance of global fund.
- Hedge – A global fund will also work as a hedge against inflation
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