Today, investors can access a wider range of markets than before. Global investing can make it possible to invest in assets across countries, even when starting with a small amount. This guide introduces global investing and passive approaches that aim to provide exposure to a range of markets.
Why consider global investing?
Global investing means spreading investments across markets in several countries rather than investing in only one country. This can create opportunities and help reduce risk.
Diversification
Diversification is a central idea in global investing. If one country experiences economic difficulties, the entire investment may not be affected because other countries may continue to grow and generate returns.
Investing in well-known companies
Global investing can provide ownership in well-known companies, including leading technology firms, consumer-goods businesses, and fashion brands.
Exposure to the global economy
Global investing gives investors a way to participate in the growth of the world economy. If the global economy grows, an investment portfolio may grow with it.
What is a mutual fund?
A mutual fund pools money from multiple investors and invests it in assets such as shares, bonds, or real estate. A fund manager oversees the fund according to its stated approach.
Professional fund management
One advantage of a mutual fund is that a professional fund manager oversees the investment, so investors may not need extensive investment expertise themselves.
Access to markets around the world
Many mutual funds invest in assets around the world, making it possible to diversify and access different countries through a fund.
For people new to investing
Mutual funds can be a convenient and accessible option for people who are new to investing.
What does passive investing mean?
Passive investing is a long-term approach that aims to deliver returns close to a reference index, such as the S&P 500 or MSCI World.
Broader exposure
Passive investing can reduce concentration by spreading investments across a range of assets rather than relying on only a few holdings.
Following a market index
Passive investing aims to grow in line with a global stock-market index. If the stock market grows, the portfolio may grow with it.
Less emphasis on selecting individual shares
Because the fund follows an index, investors do not need to spend time studying and analyzing individual stocks.
Who may consider a passive approach?
Long-term investors
This approach is intended for long-term investors.
People who prefer not to select individual shares
This approach may suit people who do not want the risks associated with selecting individual stocks.
People who believe markets can grow over time
This approach may suit people who believe capital markets will continue to grow over the long term.
People who want to spend less time on individual company research
This approach may suit people who want more time for work or other interests because it requires less time spent studying individual stocks.
Summary: global passive investing
- It can provide exposure to markets in several countries.
- Mutual funds may include companies from different sectors and regions.
- A passive fund aims to follow a market index.
- This approach may suit investors who prefer a long-term strategy and less individual-stock selection.
Investing requires knowledge and understanding. Study the information carefully before making an investment decision.
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