Global Investment or International Investment is a strategy of selecting the global-based investment options for your portfolio. These investments include options like Mutual Funds, exchange traded funds and direct investments in foreign markets.
The reason you should consider global investments is that by spreading your money among several markets, you achieve what stock market theorists have been propounding for years–diversification and hedging risk by spreading it across a mix of assets and markets. Individual economies are subject to economic cycles. By investing in several economies at a time, your portfolio can earn smoother returns.
Besides, reducing risk through diversification and global investing can also boost your portfolio returns. With no country managing to be at the top of the charts each year, the case for spreading your investments across countries definitely gets stronger.
Generally there are three types of funds:
Direct investing in global markets
Funds that use feeder route to invest in Global Funds
Fund of funds that invest in several funds to achieve international exposure
Like any other investments, Global Investment has its own set of risks such as:
Volatility in currency exchange rates
Changes in market value
Significant economic or political events
Low liquidity