Investments, tenth edition

  International Funds 

  

Many funds have international focus.  Global funds  invest in 

securities worldwide, including the United States. In contrast,  international funds   invest 

in securities of firms located outside the United States.  Regional funds  concentrate on a partic-

ular part of the world, and  emerging market funds  invest in companies of developing nations.  

  Balanced Funds   

Some funds are designed to be candidates for an individual’s entire 

investment portfolio. These balanced funds hold both equities and fixed-income securi-

ties in relatively stable proportions.  Life-cycle funds  are balanced funds in which the asset 

mix can range from aggressive (primarily marketed to younger investors) to conservative 

(directed at older investors). Static allocation life-cycle funds maintain a stable mix across 

stocks and bonds, while  targeted-maturity funds  gradually become more conservative as 

the investor ages. 

 Many balanced funds are in fact    funds  of  funds.    These are mutual funds that primarily 

invest in shares of other mutual funds. Balanced funds of funds invest in equity and bond 

funds in proportions suited to their investment goals.  

 

2

 The box in Chapter 2 noted that money market funds are able to maintain NAV at $1.00 because they invest in 

short-maturity debt of the highest quality with minimal price risk. In only the rarest circumstances have any funds 

incurred losses large enough to drive NAV below $1.00. In September 2008, however, Reserve Primary Fund, the 

nation’s oldest money market fund, “broke the buck” when it suffered losses on its holding of Lehman Brothers 

commercial paper, and its NAV fell to $.97.

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6/18/13   8:35 PM

Final PDF to printer

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P A R T   I

 Introduction