Global Opportunity Funds

Global opportunities fund is a type of opportunity fund that researches the investment opportunities which exist all around the globe. Global opportunities fund is structured similarly to the traditional investment fund and tend to be highly diversified.

The investment objective of global opportunities fund is to achieve long-term growth of capital. Under normal circumstances, the global opportunities fund invests primarily in company's securities and non-financial assets in US, European, and other continents.

The global opportunities fund tends to have no limits on the geographic asset distribution of its investments. The global opportunities fund may invest in companies domiciled in any country that the manager believes to be appropriate to the global opportunities fund's objective.

In general, global opportunities fund tends not limit its investments to companies of any particular size and may invest a significant portion of its assets. However, in an attempt to reduce portfolio risks, the managers will invest across countries, industry groups and/or securities.

Assets of the global opportunities fund are usually allocated to teams of managers who have experience with respect to a particular geographic region or sector. Global opportunities fund may also invest a substantial amount of its assets (for example, more than 25% of its assets) in a single country or a limited number of countries, and may invest up to certain percentage of its net assets in illiquid securities.

While performing investment process, the global opportunities fund's manager generally looks at asset fundamentals, the performance expectations, the target price and predicted earnings, revenue growth or arbitrage opportunity whereby he could possibly sell a particular investment opportunity with a significant profit in another part of the globe.

Global opportunities fund performs investment activities that are different from a majority of investment funds in the sense that its operations require much more effort and engagement of larger group of specialists. Reason for it is its investment activity bearing many more risk factors. Typical risks for global opportunities fund is foreign currency risk and political risk.

This means that the investment itself is influence not only by the factors directly associated with the investment itself, but also with macroeconomic conditions of the country in which investment is located. Investment in countries that are politically unstable bears also the risk of nationalization, expropriation of currency control, etc. Moreover, foreign securities markets can be less liquid due to lower trading volumes, more volatile.

Also, a wider knowledge of markets around the world is needed to successfully implement the investment strategy of a global opportunities fund.

At the same time, global opportunities fund is likely to have higher running and transaction costs. These result from its global scope of activities and extra costs associated with them, such as, for example:

  • currency exchange rate; often derivatives are used in order to hedge against currency moves;
  • due diligence performed on investors and investments is likely to be more costly and time-consuming;
  • on-site due diligence visits that would typically take place before investing into a particular non-financial asset could require travel to distant places;
  • laws and regulations of a particular country where the investment is performed might significantly differ and, therefore, specialist knowledge is required.

Who should consider investing into global opportunities fund?

Due to the nature of investments performed, global opportunities funds are decisively more risky than traditional long-only funds of funds. However, the expected profits that could be made by investment in global opportunities fund are also significantly higher and, therefore, this type of funds, especially in the temporary global environment, can be very attractive.