When it comes to investing for long-term growth, global equities funds are one of the smartest options available. Often seen as a one-stop-shop for investors, these funds are ideal for people who don’t want to have to worry about deciding geographical allocations in their portfolios.
One of the key advantages of global equities funds is diversification. This is because investing in stocks from multiple countries and sectors helps to spread risk and reduce the impact of any one company or industry on the portfolio’s performance. With a global equities fund, you’ll be invested in a range of companies, sectors, and geographies, providing a well-rounded investment mix.
Investing in global equities funds also provides exposure to companies and industries that may not be available in your home country. For example, the UK stock market is dominated by financial and oil and gas companies but has far fewer opportunities in the technology space.
Global equities funds also have the potential to deliver higher returns than domestic equity funds. By investing in companies from around the world, investors can benefit from growth in different regions and industries as well as getting access to emerging markets that may offer greater growth potential. Over the long term, has the potential to lead to higher returns and better performance. Tapping into the success of innovative companies across a wide range of sectors including healthcare, technology, and consumer brands, for example, can be a powerful growth allocation in an investors’ portfolio.
While returns can potentially be higher from global equity funds, volatility can also be lower than regional or country-specific equity funds. Research from Vanguard found that volatility within an investor’s portfolio was reduced with a 35 and 55% allocation to international equities – yet there remains a strong demand from investors to stay tied to their home market*.
Investing in a global equities fund also provides access to professional management. These funds are typically managed by experienced investors who have the knowledge and expertise to select high-quality stocks and manage risk. With more than 41,000 stocks listed on stock exchanges worldwide**, the opportunity is vast – making it the ideal place for an active manager to flourish. This can be particularly beneficial for investors who may not have the time or expertise to manage their own investments.
And these global equities managers are active – they will seek out the best ideas from around the global and adjust the portfolio over time. Ultimately, if the manager picks the right companies, the fund should do well regardless of what the wider stock markets are doing.
There are many global equities funds from which to choose – which is a blessing and a curse. Because choosing a fund is not easy. Global equities funds will vary enormously in their objectives – for example, funds that focus on household name multinationals could sit alongside those that concentrate on smaller, younger firms.
In conclusion, global equities funds are a smart investment for long-term growth. These funds offer diversification, global exposure, potential for higher returns, access to professional management, and long-term growth potential. By investing in a global equities fund, investors can benefit from a well-rounded investment mix that provides access to the best companies and industries from around the world.
To help in your search, we have selected three different global equities funds, all of which target long-term growth in a portfolio.
Rathbone Global Opportunities fund is a global stock-picking fund that invests in under-the-radar and out of-favour growth companies with a final portfolio of 40 to 60 stocks. The manager’s approach is flexible around company size, sector, and geography, although the sweet spot is mid-sized growth companies in developed markets.
IFSL Marlborough Global Innovation is a concentrated portfolio of fast growing, innovative companies. It has a heavy weight to technology firms, but it will invest in innovative disruptive companies from any sector. At least 50% of the fund must be invested in smaller companies.
CT Global Extended Alpha has a structure which allows the manager to extend investors’ potential returns by buying stocks he expects to do well and also looking to make money on stocks he expects to do badly. He describes this as “lining up on the starting grid for a motor race with an engine 50% bigger than everyone else’s”.
