International funds versus Global funds: which is correct?

• A. International funds invest the entire portfolio internationally; Global funds invest some US holdings.
• B. International funds invest only in the US; Global funds invest internationally.
• C. International and Global funds invest exclusively outside the United States.
• D. Global funds avoid any investment outside the US.

Answer: (A)

The main idea is how geographic exposure differs between the two fund types. International funds focus on markets outside the United States, so the portfolio is composed entirely (or nearly entirely) of foreign investments. Global funds, on the other hand, invest in both U.S. and international markets, so they include some U.S. holdings alongside foreign ones. That’s why the statement that international funds invest the entire portfolio internationally and global funds invest some U.S. holdings correctly captures the distinction. The other options misstate the geographic scope: international funds don’t invest only in the U.S.; global funds don’t avoid international investments; and both types don’t invest exclusively outside the U.S.