Mutual Funds: International Funds

International funds -- funds that focus their investments on overseas markets -- are a great way for investors to tap into global economic growth as well as diversify their holdings beyond just homegrown U.S. stocks.

Within the large umbrella of international mutual funds there exists just about every type of mutual fund offered: bond funds, index funds, sector funds, small-cap funds, and so on. Also, investors can choose an international fund that focuses on a single country, a region, or one that includes every foreign country under the sun. (That last category raises a distinction to keep in mind: Offerings known as global funds or worldwide funds typically include U.S. stocks or bonds in their portfolio.)

One of the great things about international funds is that they give small investors access to regional stocks that would be difficult or at least very expensive to buy on their own. Another sound reason to invest in international funds is diversification. ...