International mutual funds invest in stocks, bonds, and other securities of foreign companies and governments. Investing in international mutual funds can provide diversification, as investors are not solely reliant on the performance of domestic markets.
International mutual funds can be actively managed, meaning that the fund managers make investment decisions based on market trends and economic data.
Alternatively, international mutual funds can be passively managed, meaning that they track a market index such as the MSCI EAFE.
International mutual funds can offer exposure to emerging markets, which may have higher growth potential but also carry higher risk.
International mutual funds may also have different strategies, such as investing in growth or value stocks, or focusing on dividend-paying companies.
Currency exchange rates can impact the performance of international mutual funds, and some funds may use hedging strategies to mitigate this risk.
Political and economic factors in foreign countries can also impact the performance of international mutual funds. Some international mutual funds may be subject to tax implications, depending on the investor's country of residence.
Investors should regularly review their portfolio and consider rebalancing to ensure that their investment mix aligns with their goals and risk tolerance.