The U.S. bond market has figured only infrequently among the top-performing markets worldwide in the recent past, and investors can no longer ignore the lure of parking their funds in foreign countries. Investing in foreign bonds enhances the prospects of exposure to the best-performing foreign markets. Foreign bonds can also help to diversify currency exposure and provide protection against a long-term secular decline in the dollar. Mutual funds are a convenient way to give one’s portfolio the desired international fixed-income exposure.
Below we will share with you 5 top rated international bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all international bond funds, then click here.
T. Rowe Price International Bond (RPIBX) seeks capital growth and high current income. The majority of the fund’s assets are utilized to purchase foreign bonds and 65% of its assets are invested in foreign bonds with the three highest credit ratings. The international bond mutual fund returned 17.1% in the last one year period.
Ian Kelson is the fund manager and he has managed this international bond mutual fund since 2001.
Invesco International Total Return A (AUBAX) invests heavily in a wide range of foreign government and corporate debt instruments as well as in foreign currency. The fund may utilize derivatives to manage risk or enhance return. Not more than 30% of its assets may be utilized to purchase dollar-denominated securities. The international bond mutual fund has a five year annualized return of 5.66%.
The international bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.10% compared to a category average of 1.13%.
GMO Emerging Country Debt IV (GMDFX) seeks current income along with capital growth. The majority of its assets are invested in emerging market debt securities issued by governments. It may also invest in companies with economic linkages to emerging markets. The international bond mutual fund has a ten year annualized return of 15%.
Thomas Cooper is the fund manager and he has managed this international bond mutual fund since 1994.
Goldman Sachs Local Emerging Markets Debt A (GAMDX) invests a large proportion of its assets in emerging market securities issued by governments or corporations. Not more than 20% of its assets may be utilized to purchase fixed-income securities not issued from emerging markets and currency instruments. The international bond mutual fund has a three year annualized return of 5.78%.
As of March 2011, this international bond mutual fund held 70 issues, with 26.62% of its total assets invested in Gs + Co Joint Acct Ii Repo.
PIMCO Emerging Local Bond (PEBLX) seeks total return. The fund invests the majority of its assets in fixed-income securities denominated in currencies of emerging markets. The fund may also invest in options, futures and swap instruments. The international bond mutual fund returned 18.63% in the last one year period. .
The international bond mutual fund an expense ratio of 1.15% compared to a category average of 1.30%.
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