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Stock markets provide them with an opportunity for companies to raise money by selling parts of their businesses as shares, also known as ‘equities’. “Global equity” funds incorporate shares of companies based anywhere in the world. Global funds can include either single or multiple asset classes.
Mutual funds that only invest in U.S. stocks are categorized as domestic stock funds. International equity funds own stock shares of companies from other countries — no U.S.-based stocks. A global equity fund has the latitude to buy shares of companies from any country including the United States.
The typical global equity fund will keep a certain portion of its assets invested in U.S. stocks and the balance invested in international stocks.
A fund with a global investment objective has several advantages over funds limited to the domestic stock market. The stock markets of different countries may provide better performance at different periods of time. The global fund manager can choose from the most attractive markets as well as individual stocks.
In the global economy, some regions provide the top companies for certain sectors, such as Asia for tech manufacturers, Australia for mining companies or Switzerland for banks and drug manufacturers.
The worldwide investment reach of a global equity fund can be divided into three types of country categories: domestic U.S. stocks, established economy stocks and emerging market stocks. Most global equity funds will report how the assets are divided based on these or similar categories.
Studies have proven that shares (or equities) are one of the best long-term investments in the financial market place. They tend to outperform government bonds, corporate bonds, property and many other types of asset.
Share prices can go up and down so buying shares is not without risk, but over the long term, they can generate good returns. If you want quick returns then this may not be the best solution for you, but if you want to invest for 10 or 20 years, shares may be a rewarding investment.