If you have little capital, but still want a diverse international portfolio, a regional fund may be the answer for you. These funds are designed for the average investor who may not have enough capital to adequately diverse himself or herself without the benefit of a mutual fund. Before you invest in a regional fund, it's important to understand exactly what they are.
Understanding Your Regional Fund
Find out what it is. A regional fund is one that focuses on securities from an entire region, such as Europe or Latin America. There are some regional funds, however, that focus solely on one country.
Learn why regional funds are used. Buying stock in foreign countries can be a difficult, confusing and expensive process. Regional funds are designed to facilitate these transactions and give investors the opportunity to expand their portfolios to overseas interests.
Discover your investment options. Most regional funds strive to provide investors with a diverse range of stocks from companies based in or operating out of the area of interest. However, some regional funds are invested solely in a specific sector of the area's economy, like transportation.
Understand how they operate. Fund managers choose the securities included in a regional fund based on specific geographical criteria.
Decide on a Regional Fund
Explore the variety of regional funds currently available. A good place to begin your search is on a financial Web site (see resources).
Choose a few funds that sound interesting. You don't need to select one now, so feel free to be as liberal with your choices as you want.
Investigate each offered region. Is there something that draws you to the area? Are you impressed with the level of growth in the region? Knowing your reason for wanting to invest in a region will give you more incentive to manage it well later.
Narrow down the field to a few attractive possibilities. A great way to do this is by looking at all aspects of a given region, such as future potential, past performance and emerging industries.
Ask for a copy of the prospectus for each fund you're interested in. You can request one for free from the fund's manager.
- Regional funds are considered to be very volatile. Although they can reap high rewards, there is always the risk of country-wide recessions and disasters.
- Expect to carefully manage your regional fund. This is definitely not the type of fund that can manage itself.
By ehow.com
No comments:
Post a Comment