Investment Read Time: 3 min
With international stock markets comprising about 41.6 percent of the world's capitalization as of 2022, a broad range of investment opportunities exist outside the borders of the U.S.1
For investors who are looking to diversify their mutual fund portfolio with exposure to companies located outside the U.S., there exist two basic choices: A global mutual fund or an international mutual fund.2,3
By definition, international funds invest in non-U.S. markets, while global funds may invest in U.S. stocks alongside non-U.S. stocks.
Make a Choice
The definition may seem clear, but what may seem less clear is why an investor might select one over the other.
The reason that an investor may select a global fund is to provide the portfolio manager with the latitude to move the fund's investments among non-U.S. markets and the U.S. market in order to take advantage of the shifts in relative opportunities these markets may present at any given moment.
By investing in a global fund, the challenge for the investor is that he or she may not know at any point in time their total exposure to the U.S. market within the context of their overall portfolio.
An Inside Look
As a consequence, some investors want to manage their allocation risk by setting the broad asset allocation for their portfolio and then identifying funds that are within those asset classes. For these investors, an international fund may make more sense since it allows them to maintain a greater adherence to their desired domestic/international stock allocation.
Keep in mind that asset allocation is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss.
As you consider a global or an international fund, you should also be aware of the fund's approach to the inherent currency risks. Some funds choose to engage in strategies that may mitigate the effects of currency fluctuations, while others consider currency movements – up and down – to be an element of portfolio performance.
Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.
1. Statista.com, 2023
2. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.
3. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risk unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest.FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
FAQs
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.
Are international and global the same thing? ›
"International" has a smaller scope encompassing only two or more countries while "global" has a much larger scope which includes the whole world. 3. Although they are sometimes used interchangeably, "global" means "all-encompassing and worldwide" while "international" means "foreign or multinational." 4.
What is the difference between global and international organization? ›
Global: 'Global means something that is found in all parts of the world. ' 4. International: 'International means something that involves two or more countries or cultures coming together.
What is the difference between global and international business? ›
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.
What is global vs international economy? ›
* Global economy emphasizes the interconnectedness and interdependence of national economies. It highlights how economic events in one country can have ripple effects on other countries. * International economy focuses on the relationships and interactions between individual national economies.
What is considered global? ›
adjective. pertaining to the whole world; worldwide; universal: the dream of global peace. comprehensive. globular; globe-shaped.
What makes something international? ›
International is an adjective that describes something that involves two or more countries, like international laws that multiple countries obey, or an international flight from France to Japan.
What is the difference between global and international relations? ›
International relations primarily deal with the interactions between sovereign states and the principles guiding those interactions, whereas global affairs encompass a broader set of issues that have implications for the entire global community, including both state and non-state actors.
What is the difference between global and international management? ›
While international business programs are globally focused, it is more geared towards policies and regulations. Global management programs will prepare global sales professionals, global managers, and consultants who can help managers build a diverse workforce.
What is the difference between international and global strategy? ›
An international strategy involves the tactics adopted in different countries specific to the markets of those countries whereas, a global strategy is a concept that involves putting together plans that are unique for the worldwide market.
Global trade, also known as international trade, is simply the import and export of goods and services across international boundaries. Goods and services that enter into a country for sale are called imports. Goods and services that leave a country for sale in another country are called exports.
What is the difference between global health and international health? ›
International health focuses on the health of participating countries with intention to affect non-participating countries, while global health directly states that its goal is to promote health and prevent and treat diseases for all people in all countries across the globe.
What is an example of a global company? ›
A global enterprise owns and controls operations in two or more countries. For example, Coca-Cola, Samsung, Volkswagen, Unilever Ltd., etc.
Is globalization good or bad? ›
Globalization is facilitated economically by free trade agreements, which permit barrier-free imports and exports across borders. While globalization brings many advantages—including lower prices and higher standards of living to some—it also has drawbacks, including wealth concentration and cultural hom*ogeneity.
Who controls the global economy? ›
Although governments do hold power over countries' economies, it is the big banks and large corporations that control and essentially fund these governments. This means that the global economy is dominated by large financial institutions.
What is the difference between global and international education? ›
Global education focuses on the interrelated nature of condition, issues, trends, processes, and events while international education emphasizes specific world regions, problems, and cultures.
What is the difference between global and international studies? ›
While IR is concentrated upon understanding inter-state and inter-governmental functioning, Global Studies incorporates several disciplines that critique a nation-state centric approach to the world.
What is the difference between global and internationalization? ›
While globalization focuses on the international aspect of business and its expansion, internationalization encompasses the local factors that enable companies to thrive and serve customers in the best possible way. Both involve adapting to a variety of cultures and business practices.
