In theory, a “world” or “global” stock fund should be roughly the same no matter what country you are investing from. A world fund in Germany, for instance, should be nearly the same as a world fund in the U.S., because they both have the same objective: to track the capitalization-weighted global stock market—unlike the many varieties of international funds that take more-focused approaches.
But when we investigate the holdings of different fund managers around the world, we see quite a different picture. Some fund managers, like those in the U.K., tend to overweight their home country or region when constructing global equity funds for investors in their country. Others, like those in the U.S., tend to underweight their home country or region.
What does that mean for the returns of those funds? More often than not, the…
