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 the 5 highest yielding Zacks #1 ranked international bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all international bond funds, then click here.
| Mutual Fund | SEC Yield |
| GMO International Bond III | 20.34% |
| Pioneer Global High Yield A | 8.14% |
| GMO Emerging Country Debt IV | 6.73% |
| Federated International High Income A | 6.42% |
| JPMorgan Emerging Markets Debt | 6.03% |
GMO International Bond III (GMIBX) seeks to outperform its benchmark, the J.P. Morgan Non-U.S. Government Bond index. The majority of the fund’s assets are utilized to invest in bonds, either directly or through other GMO funds or derivatives. The international bond mutual fund returned 14.52% in the last one year period.
The international bond mutual fund has an expense ratio of 0.38% compared to a category average of 1.14%.
Pioneer Global High Yield A (PGHYX) invests the majority of its assets in domestic and foreign high yield debt securities and preferred stocks. It invests in securities with any rating and a wide range of maturity periods. The international bond mutual fund returned 20.83% in the last one year period and has a three year annualized return of 5.35%.
The Fund Manager is Andrew Feltus and she has managed this international bond mutual fund since 2001.
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 and purchase foreign fixed-income securities. The international bond mutual fund has a ten year annualized return of 14.95%.
As of May 2010, this international bond mutual fund held 141 issues, with 5.00% of its total assets invested in United States Treas Nts.
Federated International High Income A (IHIAX) invests in emerging market debt securities with different maturity periods. It may purchase a significant amount of securities rated below investment grade and invest in derivatives. The international bond mutual fund returned 17.98% in the last one year period and has a five year annualized return of 17.98%.
The international bond mutual fund has a minimum initial investment of $1,500 and an expense ratio of 1.24% compared to a category average of 1.34%.
JPMorgan Emerging Markets Debt (JEMDX) seeks total return. The fund 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 international bond mutual fund has a three year annualized return of 5.23%.
Pierre-Yves Bareau is the fund manager and has managed this international bond mutual fund since 2009.
To view the Zacks Rank and past performance of all international bond mutual 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/
