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Emerging Markets Funds

Moneyzine Editor
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Moneyzine Editor
1 mins
January 16th, 2024
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Emerging Markets Funds

Definition

The term emerging markets fund refers to a portfolio of securities originating from one or more developing countries. The objective of an emerging markets fund is to provide investors with higher than average returns relative to those available in what are considered developed or industrialized countries.

Explanation

Emerging market funds specialize in purchasing securities of companies found in what are considered developing countries. Generally, countries that would be considered "developed" include Australia, Canada, Japan, New Zealand, United States, and Western Europe. Developing countries include those located in Africa, Eastern Europe, Far and Middle East, and Latin America.

The objective of an emerging markets fund is to provide investors with returns that reflect the relatively high rates of growth found in these countries. The term emerging market refers not just to developing countries, but also the fund's management team's estimation of the country's growth potential. The possibility of realizing higher returns does come at a cost. Investors choosing emerging markets funds should have relatively high risk tolerance scores.Currency concerns, and the threat of political instability, can increase the volatility of these funds in addition to their risk.

Related Terms

The term value fund refers to a portfolio of stocks that are deemed to be undervalued by the market. The objective of a value fund includes not only providing investors with capital appreciation, but also a steady stream of dividends.
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Income Funds (Fixed Income Funds)
The term income fund refers to a portfolio of securities that are expected to provide investors with a reliable source of monthly or quarterly income. These funds may consist of bonds, money market funds, as well as equities that pay relatively high dividends.
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Global Funds (International Funds)
The term global fund refers to a portfolio of stocks and fixed income securities issued by companies and governments around the world. The objective of a global fund is to provide investors with a hedge against inflation, and take advantage of geographies offering faster growth than found domestically.
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Balanced Funds
The term balanced fund refers to a portfolio of stocks and fixed income securities that do not change their asset mix over time. The objective of a balanced fund is to provide investors with both capital appreciation as well as income.
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The term sector fund refers to a portfolio of securities issued by companies that operate in a specific industry or segment of the economy. The objective of these funds is to provide the investor with the opportunity to diversify within the sector.
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