Investing in international bond funds is one of the best ways to balance losses incurred in domestic markets, since interest rate fluctuations differ from country to country. This is because such securities 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 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 |
| JP Morgan Emerging Markets Debt | 5.76% |
| Fidelity New Markets Income | 5.38% |
| Goldman Sachs Emerging Market Debt A | 4.88% |
| Federated Emerging Market Debt A | 4.84% |
| GMO Currency Hedged Internationanal Bond III | 4.53% |
JPMorgan Emerging Markets Debt (JEMDX) seeks total return. Then 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 fund is non-diversified and may also purchase securities rated below investment grade. The international bond mutual fund returned 5.19% in the last one year period.
The international bond mutual fund has an expense ratio of 1.04% compared to a category average of 1.26%.
Fidelity New Markets Income (FNMIX) 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 has a five year annualized return of 8.31%.
John H. Carlson is the fund manager and he has managed this international bond mutual fund since 2001
Goldman Sachs Emerging Market Debt A (GSDAX) seeks both capital growth and income. The fund invests heavily in fixed income securities issued from emerging markets. The fund invests in both government and corporate debt securities and acquires securities regardless of their credit rating. The international bond mutual fund returned 4.93% in the last one year period.
As of September 2011, this international bond mutual fund held 234 issues, with 5.46% of its total assets invested in Russian Federation 7.5%.
Federated Emerging Market Debt A (IHIAX) invests the majority of its assets in debt securities issued from emerging markets. It is non-diversified and may purchase shares of exchange traded funds and invest in derivative contracts. The international bond mutual fund has a three year annualized return of 23.7%.
The international bond mutual fund has a minimum initial investment of $1,500 and an expense ratio of 1.25% compared to a category average of 1.26%.
GMO Currency Hedged International Bond III (GMHBX) 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 has a ten year annualized return of 4.43%.
Thomas F. Cooper is the fund manager and he has managed this international bond mutual fund since 1994.
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.
To read this article on Zacks.com click here.
Zacks Investment Research
