The key benefit that global mutual funds provide is diversification since they invest in overseas markets while also holding domestic equities. Thus, they make good additions to a portfolio weighted in favor of domestic investments. The tepid economic climate in mature markets such as Europe and the US has led global fund managers to look for better opportunities in emerging markets which may also imply dealing with greater volatility However, it has been observed over the years that a judicious combination of foreign and domestic investments generate better returns at lower levels of risk.

Below we will share with you 5 top rated global mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all global funds, investors can click here to see the complete list of funds.

USAA World Growth (USAWX) seeks capital growth. The fund invests predominantly in domestic and foreign equity securities. It may invest in securities from emerging markets and also in various entities irrespective of their sizes. The global mutual fund has a one year annualized return of 23.53%.

The fund manager is David R. Mannheim and he has managed this global mutual fund since 2002.

Oppenheimer Global A (OPPAX) invests in a wide range of securities worldwide, which may also include companies from emerging markets. The fund focuses on investing in large and mid-cap firms and invests in minimum three countries. The global mutual fund has a one year annualized return of 22.22%.

The global mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.22% compared to a category average of 1.36%.

MassMutual Premier Global A (MGFAX) seeks capital appreciation over the long term. It invests without any restriction across several countries including emerging economies. However, it primarily focuses on investments in developed markets such as the US, Western European countries and Japan. The global mutual fund has a one year annualized return of 21.75%.

As of December 2012, this global mutual fund held 88 issues, with 3.13% of its total assets invested in Ericsson Telephone Company.

Polaris Global Value (PGVFX) invests predominantly in common stocks of companies across the world as well as ADRs. These firms may also include companies from emerging markets. It invests in around 15 different industries and seeks to diversify across regions. The global mutual fund has a one year annualized return of 21.03%.

The fund manager is Bernard R. Horn, Jr. and he has managed this global mutual fund since 1998.

Thornburg Global Opportunities A (THOAX) seeks capital growth over the long term. The fund invests in a wide range of equity securities worldwide. This includes common and preferred stocks, real estate investment trusts and other equity trusts. The global mutual fund has a one year annualized return of 18.86%.

The global mutual fund has a minimum initial investment of $5,000 and an expense ratio of 1.49% compared to a category average of 1.36%.

To view the Zacks Rank and past performance of all global mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank.