 Personal Finance Powerpoint Presentation International Fund. Prepare to get financially fit by practicing personal finance. Most of this information comes from Investopedia International 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 3, 2022 in prior presentations. We've been taking a look at investment goals, strategies, tools, keeping in mind the two major categories of investments. That being the fixed income, typically the bonds, 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 than if we invested in individual stocks, individual bonds. Keeping that in mind, we're now asking, what is an international fund? An international fund is a mutual fund that can invest in companies located anywhere in the world outside of its investor's country of residence. So I'm typically going to be thinking of this from the perspective of a United States resident. So typically if we're thinking as an individual investor, we want to diversify our portfolio. So we might be saying, I'm not going to invest possibly in individual stocks and bonds, but rather possibly using a tool like a mutual fund that's going to be grouping these investments together with other investors have the fund manager help me to diversify. Then the question would be, do I want one fund that's going to have a wide diversification or do I want to have multiple funds that are going to diversify in some other way? So we might then have one fund that's going to have diversification in the country for example and possibly we want another fund that's going to diversify in some way regionally or outside of our home country. So we have different perspectives in terms of how we can use these tools, these mutual funds for example to broaden our diversification. So if we're outside of the country, we might be thinking now, do I want a mutual fund that's going to be investing broadly outside the country? Do I want a mutual fund that's going to invest outside of the country and inside of the country? Or do I want mutual funds that are going to be more specific in some way shape or form by region or by class of country based on say development for example? Okay, so then we have the international funds differ from global funds which can invest in companies from any country in the world. International funds may also be referred to as foreign funds. How an international fund works? International funds can help investors to broaden their investment horizon resulting in a higher potential for return. And remember what you kind of want to keep in mind when you're investing in outside of a country fund is do I want a fund once again that includes my home country in the broadness of the portfolio or a fund that is just excluding my home country because I already have other funds that are including my home country for example and then again you can break it down by region or classification. So for US investors international funds can include developed, emerging or frontier market investments in a range of asset classes these funds can offer varying levels of risk and return. So one way we can then think about international funds outside of our home country is we might be looking at developed, emerging or frontier market investments. This is one way that we can have the classifications grouped for the different kind of categories of our investment strategies. International countries risks and potential returns will vary by country. Developed market countries are considered to offer the least risk as they contain the world's most advanced economies. So we can think about different economies in a similar way as we've talked about different companies for example. We know when we think about the cycle of a company that it might go through a growth phase where we have more potential for growth if you think of something like an apple has a massive growth at some point in time and then it tends to taper off and if it makes it up to the top to being a really big company then it's just going to be marching along up top. You wouldn't expect massive growth in the same way as you had down here because it's already a behemoth at that point in time. The same thing is true with countries. You could think well if a country is not as developed then just a little bit of development just a little bit of infrastructure a little bit more stability in the law a little bit more capitalization might put a whole lot more money into a lot of people's pockets and that could increase and have a rapid kind of growth. It's also been thought that it's kind of easier for some countries to develop once the idea of develop once the tools the knowledge has already been put in place so you would think there's potential for a rapid growth which would be great for investment but of course there's more risk there as well. Developed countries that have already been developed again they're like a large company they're already behemoths so you would think that you're not going to see that same kind of spike in terms of the growth you would think they'd be marching along pretty well at that point and therefore having less risk related to them. So the emerging market countries offer investors some significant gains with higher risks since the economies and infrastructures of these countries are growing but volatile so within the emerging markets investors will find many funds representing leading sub-segments such as the BRIC, Brazil, Russia, India and China and Asia X Japan. So frontier and other undeveloped countries will have the highest risk with some potential for return as innovations develop. So debt and equity funds in addition to country specific consideration investors will also find international funds managed to various asset classes so now another classification just as we do in our home funds in the U.S. for example we might then classify based on debt say bonds based on equities we might try to get a portfolio that's going to be diversified across debt and equity or we might try to look for portfolios that are just or funds for example that just cover equities and some funds that just cover debts depending on how much control we want over the percentage allocations for example. So debt and equity funds are the two most common providing a broad universe of investment so when we're outside of the United States we got the same thing do we want to invest in different regions how are we going to classify the regions that we're going to be investing in and then do we want to be investing just in equities or just in bonds or some mix between the two different funds can help us with our different needs with our different understanding with our different portfolio concepts. So U.S. investors seeking to take more conservative bets can invest in government debt or corporate debt offering from various countries outside the United States. So if we're looking at kind of like bond investments for example note that the United States because they're considered basically the safe haven so if there's problems in the world people typically run to investing in say U.S. bonds of some kind because it would start that the U.S. economies good and strong and that if there's a problem the country can print money if they need to and so they don't want to not pay off the debt. So you would think that other countries and companies in other countries or you can also think that U.S. companies then if you buy U.S. company bonds loaning them money in essence in return for interest payments then you would expect that they would have to give you higher interest payments because there's more risk because a company cannot just print money. Other countries because they're not as big as large as the United States you would think also would have more risk involved be more likely to default although hopefully not default but more likely than the U.S. what you would think government bond and therefore they're typically going to have maybe higher rates of return in tie to them. So equity funds offer diversified portfolios of stock investments that can be managed to a variety of objectives. So asset allocation funds offering a mix of debt and equity can provide for more balanced investments with the opportunity to invest in targeted regions of the world. International fund investing international fund investing can offer high returns but it usually also comes with more risk as a higher risk investment it is generally best used as an alternative to long term core holdings. So some factors that can increase risk include currency and changing economies. So the currency of different countries can be an issue in terms of how well they're managing the currency currency is generally a concern when investing in any international investment as currency volatility can affect the real returns of an investor's portfolio. So this is one of the things that when you're thinking about investing in like developing countries you're saying one of the things that can kind of cripple the whole development process is that their currencies isn't as well managed possibly and that can cause problems with developing of the growth. You can have problems with the politics that are going to be involved and so on and so forth. So changing economies are also a factor and require consistent due diligence as changing regulations and legislation can affect the economic trends of international market countries. So clearly the environment in which they are doing business is going to have a big impact on the businesses being done. That's why you would think if you could find a way to have more stable kind of political environments more stable currencies then and possibly have more from a Western perspective capitalistic type of markets that are more efficient typically you could have expansive explosive growth but that doesn't always happen. So in the popular diversified emerging market category the funds that have seen the highest returns through 2020 include Artisan Developing World Fund that's the PGIM Genison Emerging Markets Equity Fund and Kalamaz Evolving World Growth Fund.