Abstract: This paper studies how portfolios meant to be invested globally are actually allocated internationally using unique micro data on U.S. mutual funds. While investors have shifted toward funds with more flexibility to invest globally, mutual funds invest in a finite, rather small number of stocks, almost independently of their investment scope. In fact, the number of holdings in stocks and countries from a given region declines as the investment scope broadens. This restricted investment practice has a cost: there are unexploited gains from international diversification. Mutual funds investing globally could achieve better risk-adjusted returns by broadening their asset allocation, including stocks held by more specialized funds within the same mutual fund family (company). This investment pattern is not explained by the lack of instruments or information, a better ability of global funds to minimize negative outcomes, or transaction costs. Instead, mutual fund families play an important role, questioning existing theories.