By shopping for securities worldwide, you effectively stretch those investment dollars. Until the advent of mutual funds, however, these markets were out of reach to many investors. Over the past few years, the number of international mutual funds has mushroomed in Canada, from less than 50 in 1985 to nearly 500 in 1995, as mutual fund companies tempt investors with the promise of higher returns in a variety of marketplaces. Investors can now take their pick from funds with assets in a particular region, such as Europe, Asia, or the Pacific Rim, or a particular country, like China or the United States. Although most commonly referred to as international funds, these funds fall into two different categories.
International funds invest worldwide, excluding Canada.
Global funds, on the other hand, invest around the world, including Canada. By now, you know that one of the major advantages of investing in mutual funds is diversification. By diversifying, you reduce risk, and by diversifying worldwide, you reduce that risk further. World markets do not all march to the beat of the same drummer. By investing in equity funds that hold assets in various countries or regions, you can take advantage of these different market timings.