A regional fund is a mutual fund that is operated by professional managers making investments in securities from a particular geographical region like Europe and Asia. The managers allocate investments and try to make income and capital gains.
In most cases, regional funds have a diversified portfolio of companies that are based in the specific geographical area but operated out of the place. There are also some regional funds investing in a particular segment of the region’s economy.
Regional funds consist of pools of money collected by a lot of investors to invest in various kinds of securities like bonds, stocks, and loans. Many funds focus on a single class of assets, such as bonds, whereas others provide a diversified portfolio of assets.
Like other mutual funds, regional funds can be active or passive. The active regional funds are operated by portfolio managers or professional management teams. They always try to beat the regional index’s performance. The passive regional funds, on the other hand, tend to match the performance of a regional index and minimize the costs.
Most regional funds only make investments in companies that are publicly traded, yet a few active funds also invest in privately-held enterprises.
A lot of investors buy regional funds in the hope of being diversely exposed to a specific region that is deemed as able to provide high returns. Since many common investors do not have enough money or capital to diversify their portfolios, regional funds, to some extent, offer much help for those average investors.