The other six funds have close to 80 per cent of their allocation divided between the US and the UK market, followed by European countries including Ireland and Switzerland.
While the over-reliance on the UK market could suggest the economy is improving, it could also mean the funds are at risk, especially if events such as a rate hike from the Bank of England, or a referendum on leaving the EU come into play.
Risks
Although the Global sector is often considered lucrative, there are a number of risks investors should consider. These risks are quite similar to those facing any equity fund.
Fund managers point to the dependence on equity markets as one of the biggest challenges for this type of investment. While relying on equities, they are also exposed to regular market movements as a reaction to events such as plunging commodity prices.
The funds in the Table have increased exposure to the developed world, but there are also trusts with exposure to emerging markets. Taking the current performance of emerging markets in view, funds with exposure there may see higher risks compared with those with a high allocation to countries like the UK and the US.
Trusts in this sector can also some currency risk and due to the nature of this, fund managers advise investors to look at this as a long-term investment.
Investors looking for higher returns could often find global investment trusts to be an attractive option, but it is still essential to carry out proper due diligence and understand the market well.
It is also important to do proper research since equity investments can be risky. But once proper guidance is in place, the sector could offer attractive returns and be a part of a well-constructed and diversified portfolio.
Five questions to ask: Global Investment Trusts
Where do Global investment trusts invest?
Funds invested within the Global sector have exposure to equity markets and can invest in various countries around the world. Fund managers carry out proper due diligence before deciding to include a country in the fund’s portfolio.
What are the advantages of Global funds?
Investment in this sector can be better than single-country focus funds since they are able to diversify their risk across regions and sometimes asset classes too. In the case of a single-country fund, there is a higher risk to consider.
What is the cost of Global sector trusts?
The ongoing charges for funds in this sector range from 0.50 per cent to 0.80 per cent. While they are considered expensive by some, others look at it as a lucrative long-term option.
