Schedule a Free Consultation

facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
International vs. Global Funds: Investors Need to Know the Difference Thumbnail

International vs. Global Funds: Investors Need to Know the Difference

Diversification is a well-known strategy to help reduce the risk of investment. And with international stock markets accounting for about 44 percent of the world’s capitalization, a broad range of investment opportunities exist outside the borders of the U.S.1

Two common investment opportunities that exist outside of the United States include international mutual funds and global mutual funds. But what’s the difference between the two? 

Looking at each fund’s definition, advantages and disadvantages, we’ll break down how international and global mutual funds work to help you better understand your investment options. 

International Funds

International mutual funds only invest in markets outside the United States. For investors, the biggest advantage an international fund provides is its ability to control the allocation of national and global stocks.

This control allows investors in international funds to separate investments in U.S. markets from investments in non-U.S. markets, giving greater control of their overall investment portfolio, as opposed to global funds which provide no separation. 

Global Funds

Global mutual funds invest in global stock markets without excluding U.S.-based stocks. One advantage created by a global mutual fund is its ability to capitalize on the shifts in relative opportunities these markets may present at any given moment. 

However, by consolidating into one fund, investors have reduced visibility and control over their overall portfolio’s separation between domestic and international stocks. 

Advantages and Disadvantages

International mutual funds and global mutual funds each have some pros and cons that investors should be aware of.

Shared Diversification

Depending on how a global fund is managed, and whether an investor has other investments, there could be overlaps in domestic markets. 

For example, an individual investor could have stock in a domestic company, then choose to invest in a global fund to access global markets. This fund may then choose to invest in the same stock the investor already owns. This, in turn, limits diversification, which may be one of the reasons for investing in a global mutual fund in the first place. 

Such an investor may opt for an international fund in place of a global fund to reduce the chance of overlap while still accessing international markets. With this in mind, it’s important to know that asset allocation is an approach to help manage investment risk and is not a guarantee against investment loss.

Currency Risks

Investors should also be aware of their chosen fund’s approach to the inherent currency risks of international and global funds. Some funds choose to engage in strategies that may mitigate the effects of currency fluctuations, while others consider currency movements – up and down – to be an element of portfolio performance.

Tax Implications

Also, it’s important to be aware that both global mutual funds and international mutual funds may face different taxes depending on the location of the fund. For example, mutual funds located outside of the United States could be considered a Passive Foreign Investment Company, which processes taxes under a different set of rules, when compared to U.S.-based international or global funds.2 

Professional Management

The nuances of non-U.S. markets can be difficult for average investors to understand, let alone time-consuming. By using a mutual fund, you are entrusting your investment with a professional. Such professionals have the support and knowledge to properly understand these global markets, and mutual funds often cost less when compared to direct investments.3

Whether an international mutual fund or a global mutual fund will work for you depends on your unique financial circumstances. Always consult with your financial advisor before making any investment decisions, and be sure to understand the advantages and disadvantages of all of your investments. 

Click here to schedule a call with a BWC advisor today.


  1. https://www.statista.com/statistics/710680/global-stock-markets-by-country/
  2. https://www.irs.gov/forms-pubs/about-form-8621
  3. https://www.statista.com/topics/1441/mutual-funds/

The information presented in this article is obtained from or based on sources believed to be reliable. BWC does not represent or warrant its accuracy or completeness and is not responsible for losses or damages arising out of errors, omissions or changes or from the use of information presented in this article. The article does not purport to contain all the information that an interested party may desire and, in fact, provides only a limited view. Information presented does not constitute an offer to sell or a solicitation of an offer to buy any security.

All investments involve risk, including loss of principal invested. Past Performance does not guarantee future performance. Individual client accounts and performance vary. BWC does not provide tax advice.

About Beirne Wealth Consulting Services, LLC – www.beirnewealth.com

Beirne Wealth Consulting Services, LLC (“BWC”) is a privately owned, SEC Registered Investment Advisor with offices in Connecticut and Pennsylvania. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit www.beirnewealth.com or give us a call today at 888-231-6372.

*Registration does not imply a level of skill or training.

© 2021 Beirne Wealth Consulting Services, LLC (BWC). All rights reserved. Reproduction or Use without permission is prohibited.