In an increasingly global economy, opportunities for investors are occurring all over the world. In fact, the majority of the world’s corporate earnings (64% 1 ) are currently being generated by companies outside the United States.
Many investors understand the importance and appreciate the benefits of diversifying their equity portfolios internationally. But many of these same investors have traditionally limited their corporate bond exposure to opportunities in the United States. However, diversifying your corporate bond exposure globally has the potential to reduce risk, increase income and enhance total returns.
• Investors the world over use corporate bonds as a core position to help generate income, reduce risk and diversify their portfolios 2
• There is a much wider opportunity set in corporate bonds when investors do not restrict themselves to U.S. issuers—a global universe currently features 2,761 issuers and $11.2 trillion in overall debt 3
• Historically, incorporating non-U.S. corporate debt has provided diversification benefits within a corporate bond portfolio 4
In our opinion, global corporate bonds could provide many important benefits as a core holding in an investor’s fixed income portfolio.
WisdomTree Global Corporate Bond Fund (GLCB) was launched on Jan. 30.
Rick Harper is head of fixed income and currency for WisdomTree Asset Management. This post was republished with permission from the WisdomTree blog.
1 MSCI, Bloomberg, as of December 31, 2012. Calculation based on the MSCI ACWI and MSCI ACWI ex-U.S. indexes.
2 Western Asset Management, 2013.
3 Barclays Global Credit Index, as of December 31, 2012. The Barclays Global Credit Index (Hedged) contains investment-grade and high-yield credit securities from the Multiverse Index. The Multiverse Index is the merger of two index groups: the Global Aggregate Index and the Global High Yield Index.
4 Barclays, WisdomTree, 2013.