Individuals around the world increasingly are turning to mutual funds to meet their diverse investment needs. This growth in mutual fund assets is expected to continue as the middle class continues to expand around the world and baby boomers enter their peak savings years. U.S. mutual funds offer numerous advantages. Foreign investors may buy U.S. funds for professional portfolio management, diversification, and liquidity. Investor confidence in our funds is strong because of the significant shareholder safeguards provided by the U.S. securities laws.
Investors also value the convenient shareholder services provided by U.S. funds.
Nevertheless, while the U.S. fund industry is the global leader, foreign investment in U.S. funds is low. Today, less than one percent of all U.S. fund assets are held by non-U.S. investors. U.S. Tax Policy Encourages Foreign Investment in the U.S. Capital Markets. Pursuant to U.S. tax policy designed to encourage foreign portfolio investment 3 in the U.S. capital markets, U.S. tax law provides foreign investors with several U.S. withholding tax exemptions. U.S. withholding tax generally does not apply, for example, to capital gains realized by foreign investors on their portfolio investments in U.S. debt and equity securities.