International bond markets presently constitute 60% of the available fixed-income investment opportunities worldwide. This includes bond issues from emerging economies and non-government entities, such as European corporations. Since interest rate fluctuations differ from country to country, international bonds are another way to balance downturns in the U.S. markets. This is because they show little correlation with domestic equities and only moderate correlation with investment grade domestic debt. Further they help in diversifying currency exposure and protecting assets against a long-term secular decline in the U.S. dollar.
Below we will share with you 5 top rated international bond 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.
Thornburg Strategic Income A (TSIAX) seeks current income by investing in a wide range of income generating securities worldwide. It invests heavily in debt and also purchases income producing stocks. It may vary the proportion of debt to equity in its portfolio over time. The international bond fund returned 33.77% over the last one year period.
The international bond fund has a minimum initial investment of $5,000 and an expense ratio of 1.25% compared to a category average of 1.17%.
T. Rowe Price Emerging Markets Bond (PREMX) seeks to provide a high level of current income and invests heavily in emerging market debt securities. These could be both government securities and those issued by corporate entities. It is non-diversified and may invest in bonds with relatively low ratings. The fund has a five year annualized return of 8.96%.
Michael J. Conelius is the fund manager and has managed this international bond fund since 1995.
MainStay Global High Income A (MGHAX) invests the majority of its assets in high-yield government securities. It also invests in securities issued by companies located in at least three different countries, focusing on emerging markets. The fund has a ten year annualized return of 12.33%.
As of December 2009, this international bond fund held 94 issues, with 5.80% of its total assets invested in Indonesia Rep 144A 11.625%.
Goldman Sachs Emerging Markets Debt A (GSDAX) invests at least 80% of assets in emerging-market fixed-income securities. Most of the countries which the fund invests in are rated below investment grade or are unrated. The international bond fund returned 36.23% in 2009 and has a five year annualized return of 9.49%.
The international bond fund has an expense ratio of 1.22% compared to a category average of 1.32%.
SEI International Emerging Markets Debt A (SITEX) seeks total return by investing in emerging market debt securities. It invests the majority of its assets in dollar denominated debt issued by governments or companies from emerging markets. It does not invest more than 25% of its assets in a single country. The international bond fund returned 40.23% in 2009.
The Fund Manager is Peter J. Wilby and he has managed this international bond fund since 1997.
To view the Zacks Rank and past performance of all international bond funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/
