Welcome to our second review, in which we'll take a look at some of the notable happenings in the fund world over the past week and tell you what this news means to Foolish investors.

Single-country funds on the decline?
Recently, Fidelity announced that it would merge two of its focused regional funds into other Fidelity funds that invest in wider range of countries. The firm's Nordic Fund (FNORX), which invests throughout Scandinavia, will become part of the $4.4 billion Europe Fund (FIEUX), while the single-country Fidelity Advisor Korea Fund (FAKAX) will merge into the Fidelity Advisor Emerging Asia Fund (FEAAX). When companies merge existing funds, many times it's an attempt to erase a fund with a poor track record. Not so with these funds: Both rank at the top of their peer groups, whereas the funds they will be joining have less impressive performances. So why is Fidelity making this move?

The answer likely has to do with that old investment maxim, diversification. The Foolish truth is that very few investors need country-specific funds. Why buy a fund that invests solely in one country or in one region? There is just too much country-specific risk involved. A better approach is to diversify and invest in a broader international fund that looks across regions and across countries. Better diversification means there is less of a chance you'll be caught flat-footed by the next international downturn or crisis. Every day, the global economy becomes more and more interconnected, and as that happens, it makes less and less sense for single-country funds to exist. Looks like Fidelity is catching on, and making a move in the right direction.

XShares keeps the new ETFs coming
Can anyone turn off the spigot? It looks like the torrent of exchange-traded funds being brought to market continues. For example, XShares Advisors is set to introduce several ETFs, including six international funds and two health-care funds. More specifically, one of the international funds will focus on small- and mid-sized companies in emerging countries such as China, India, and Thailand. Three other funds will focus exclusively on Brazil, China, and Israel. And one of the health-care funds will invest in companies that promote a healthy diet and exercise as a method of preventing illness.

OK, XShares, put down the SEC filing prospectus and slowly back away from the niche ETFs. When you see so many funds being created with such a narrow focus, you really have to wonder. Weren't you just waiting for a fund that will let you invest in all those small-cap companies in Pakistan you couldn't get your hands on? Let's have some sanity in the great ETF land rush. There's probably no need for any Fool to jump on any of these offerings. Remember the whole diversification concept? That applies here, too. You would be better served focusing on your own diet and exercise than by purchasing a health-care ETF that invests in companies that do the same thing.

Survey: Fund managers moving into equities
Lastly, a new survey by Merrill Lynch polling 214 fund managers shows that these managers have been increasing their equity allocations over the past few weeks in response to the recent rally in prices. The survey says they are doing so even though they are pessimistic about corporate earnings and global inflation. Apparently, as stocks around the globe have risen by about 5% over the past four weeks, these fund managers have found themselves more willing to take on risk and have added to their equity holdings.

Does this strike anyone else as a bit backward? Prices go up, and then you start looking to buy more stocks and take on more risk? Whatever happened to "buy low, sell high"? It just goes to show how prevalent the thinking in the industry is; i.e., you wait until stocks go up to buy, and then once they fall, you start to panic and then sell. Doesn't it make more sense to do the opposite? Look, there are many funds out there that can invest your money and get you exposure to winning stocks like McDonald's (NYSE:MCD), General Electric (NYSE:GE), and Starbucks (NASDAQ:SBUX). The harder thing is to find a fund manager that can do that at the correct time. And it seems to me moving into equities after a rally is kind of like closing the barn door after the horse is already out. That's not to say the rally couldn't have much further room to run, but if your fund manager's main motivation behind stocking up on equities is that they have run up in recent weeks, I'd start to worry. And then I'd start shopping for a new fund manager.

Now that you know what's been happening in the world of mutual funds, take the next step and find out which funds represent compelling investments. The Fool's Champion Funds newsletter brings that information right to your doorstep. Fool fund expert Shannon Zimmerman shows you how to find the winning funds that you've been looking for. Start your free 30-day trial today.

Fool contributor Amanda Kish lives in Rochester, N.Y., and does not own shares of any of the companies mentioned herein. Starbucks is a Stock Advisor recommendation. The Fool has a disclosure policy.