In my opinion, clubs should stick to equities, especially those of growing companies. Still, there is one type of mutual fund that might make sense for an investment club. Much has been written about the global economy and the fact that growth rates in many other nations will continue to be higher than in the United States. There are a number of negatives, however, when an investor tries to participate in that growth by selecting stocks that are headquartered outside of our country. Foreign-based companies whose securities do not trade in the United States do not always have the same disclosure laws as we do.
Accounting standards are different and there are political risks to consider.
And yet, to take advantage of growth outside our country, there should be room in a club's portfolio for stocks of some foreign-based corporations. Rather than try to select the best foreign stocks to own, a club may wish to consider buying an international or global mutual fund. The advantage is that the fund has experts who follow the companies closely and are aware of political changes as well as the local economies. They would be much more aware of a potential currency devaluation, for example, than an individual investor. I prefer a fund that invests throughout the world rather than one which concentrates on stocks within one country.