 Personal Finance PowerPoint Presentation, Regional Fund. Prepare to get financially fit by practicing personal finance. Most of this information comes from Investopedia Regional Fund, which you can find online. Take a look at the references, resources, continue your research from there. This is by James Chen, updated May 26, 2022 in prior presentations. We've been looking at investment goals, strategies, tools, keeping in mind the two major categories of investments. That being the fixed income, typically the bonds and the equities, typically the common stock. Also thinking about tools we might be using such as mutual funds, ETFs, possibly helping us to diversify with less of an initial investment as opposed to investing in individual stocks, individual bonds. Keeping that in mind, we're asking what is a regional fund? A regional fund is a mutual fund run by managers who invest in securities from a specified geographic area such as Latin America, Europe, or Asia. So as an individual investor, when we're thinking about our investing strategy, and I'm usually thinking about this from the strategy of a United States investor as the home country, then you're typically thinking I'm going to invest in my home country. That's where I have the most awareness of my investment. And then possibly in order to diversify, we might want to expand more globally. We're also probably going to be investing in rather than individual stocks in things like mutual funds and ETFs, helping us to diversify. We might try a strategy to have one mutual fund or ETF that is broadly diversified, giving us exposure to many, many different things, or we might try to be a bit more specific, giving us a little bit more control, although still using mutual funds or ETFs by picking certain segments, possibly by market cap, possibly by industry, and then possibly we're going to be thinking in terms of our current country like the United States versus investing abroad. If we're going to invest abroad, then the question is how are we going to do that? Are we going to do that one broad fund that's going to be investing abroad? Are we going to have a fund that has both our current country and abroad? Or can we get more specific by say region or type of region? And so these are the kind of questions that we can come up. So now we're considering our regional fund and that perspective, which once again a regional fund is a mutual fund run by managers who invest in securities from a specified geographical area such as Latin America, Europe, or Asia. A regional mutual fund typically owns a diversified portfolio of companies based in and operating out of a specified geographic area. So if we're trying to say, hey, look, I'd like to get diversification outside of my home country, but I really think this one particular area is where I want to be. You might be saying, hey, look, maybe I try to get diversification outside my home country by investing in a fund that's more broad and based. And then you might get more specific, for example, if you think for whatever reason that a particular area is where you would be more heavily or would like to be more heavily weighted in terms of your investment choosing a fund that's going to be more specified in that way. However, some regional funds also invest in a specific segment of the region's economy. For example, a Latin America Energy Fund is considered a regional fund. How a regional fund works? A regional fund like all mutual funds is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, investment grade bonds, high yield bonds, leveraged loans and other assets. Many specialize in one asset class such as stocks while others offer a diversified mix of asset classes. Professional money managers allocate the funds investments and attempt to produce capital gains, income, or in some cases both on behalf of investors developing on the fund objectives. So clearly we're pulling the money together. We're trying to invest in things like stocks, bonds, and so on and so forth. And we're trying to get a return on that, which typically is in the form of gains, stock price going up, dividends, or interest, whatever the case may be. It's counterproductive, but some investors also consider emerging market funds, regional funds, even though these are not confined to a specific geographic region. Emerging market funds typically invest in China, India, and Russia as well as a mix of countries in Latin America, Southeast Asia, and Africa. So the classification can be a little bit confusing. In other words, the emerging markets can sound kind of similar to the regional funds although they are different. So let's look at that one more time. It's counterproductive, but some investors also consider emerging market funds, which is another kind of classification that we could use, funds, regional funds, even though these are not confined to a specific geographic region. Emerging market funds typically invest in China, India, and Russia, as well as a mix of countries in Latin America and Southeast Asia and Africa. So when we're thinking about where we're going to invest abroad, again we might have a broad portfolio where we're trying to find a fund that covers a lot of investments to be broadly diversified, or we might try to be categorizing in terms of, say, emerging markets, for example, and the idea there being that we're trying to invest in those kind of markets that might have more potential for growth because of the fact that they're in the emerging markets, but they're not tied to a specific region, or we might for whatever reason say, hey, look, I think this particular region is the place I want to be and kind of be more specific and then choose possibly a regional fund in that case. So many investors purchase regional funds for diversified exposure to a particular geographic region they think offers an above average return prospects. These funds are practical for the average investor since most people won't have enough capital to adequately diversify across many individual investments in the region, nor would they necessarily have the expertise to select holdings on their own. In other words, you're probably not going to want to invest in individual stocks because it's going to be hard to diversify just as it would for domestic stocks and you're not going to have the same capacity to do the research. It'll be even more difficult, you would think, to do the research in another country. You might have a general idea that that particular region is where you want to be, but you might not have the specifics in terms of which actual company you want to be investing in, investing then in the region in general. So like all mutual funds, regional funds may be either active or passive, so we might have an active manager trying to beat the market, beat the index. So we might just be saying, hey, look, I just want to bet on the market as a whole, bet on the average, bet on the index. Obviously, the active management costs more because you're paying a professional manager. So the former is run by a portfolio manager or a management team and seeks to beat the performance of a regional index. The latter attempts to minimize fees and match the performance of a regional index. Most regional funds invest only in publicly traded companies. However, some active funds also include a small number of investments in privately held companies. Some regional funds cost more to operate than U.S. only funds. Therefore, investment managers typically charge higher fees for these funds. Regional fund versus international funds, the face off. So most regional funds are indeed a type of international fund. The international category also includes funds with broad exposure to all regions outside the U.S. or specific exposure to investments in one non-U.S. nation. So the question would be, what kind of fund do I want? Just like we would on a local fund. Like one fund that's going to be blended that it's going to kind of cover me for everything. So I'll be well diversified, although I won't have a lot of control over the percentages in any particular area. Or possibly do I want to have multiple funds? So I have a little bit more control similar on the global kind of component. Do I want to have one fund that's going to be broadly diversified? Or do I want to have a bit more control by taking these kind of regional funds or funds that are going to be more specific in some way, some shape, some form? So for example, many investment managers offer an international investment grade bond fund as well as a China equity fund. Each is an international fund.