Investing in international bond funds is one of the best ways to balance losses incurred from US markets, since interest rate fluctuations differ from country to country. This is because they show little correlation with domestic equities and only moderate correlation with investment grade domestic debt. They also help in diversifying currency exposure and protecting assets against a long-term secular decline in the U.S. dollar. With their widely diversified holdings, mutual funds offer a secure route to investing in the international bond market.
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.
Consulting Group International Fixed Income (NASDAQ:TIFUX - News) invests the majority of its assets in non-dollar denominated fixed-income securities. The fund focuses on acquiring securities rated investment grade. Not more than 10% of its assets may be utilized to purchase high yield securities. A maximum of 15% of its assets may be invested in merging market securities. The international bond mutual fund returned 5.86% in the last one year period.
Mohamed A. El-Erian the fund manager and has managed this international bond mutual fund since 2009.
GMO Currency Hedged International Bond III (NASDAQ:GMHBX - News) seeks total return higher than its benchmark, the J.P. Morgan Non-U.S. government Bond Index (Hedged) (ex-Japan). The fund invests a large share of its assets in bonds and is non-diversified. The international bond mutual fund returned 7.97% in the last one year period.
The international bond mutual fund has an expense ratio of 0.39% compared to a category average of 1.11%.
JPMorgan Emerging Markets Debt (NASDAQ:JEMDX - News) invests the majority of its assets in debt securities issued in emerging markets. These securities may be dollar-denominated or may be issued in foreign currencies. The fund is non-diversified and may also purchase securities rated below investment grade. The international bond mutual fund returned 6.08% in the last one year period.
As of November 2011, this international bond mutual fund held 177 issues, with 8.66% of its total assets invested in Russian Federation 7.5%.
Goldman Sachs Emerging Market Debt A (NASDAQ:GSDAX - News) seeks both capital growth and income. The fund invests the majority of its assets in fixed income securities issued from emerging markets. It purchases both government and corporate debt securities and acquires securities regardless of their credit rating. The international bond mutual fund returned 6.56% in the last one year period.
Samuel Finkelstein is the fund manager and he has managed this international bond mutual fund since 2003.
Fidelity New Markets Income (NASDAQ:FNMIX - News) invests a large proportion of its assets in emerging market securities and other instruments with economic linkages to such markets. The fund focuses on acquiring debt securities and is non-diversified. The international bond mutual fund returned 7.94% in the last one year period.
The international bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.88% compared to a category average of 1.26%.
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