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 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.
MainStay Global High Income A (MGHAX) invests the majority of its assets in foreign high-yield debt securities. It invests in such securities issued by governments, their agencies as well as companies located in at least three different countries, focusing on emerging markets. The international bond fund is non-diversified and has a ten year annualized return of 12.89%.
The Fund Manager is Gary Goodenough and he has managed this international bond fund since 2003.
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 international bond fund returned 13.31% in the last one year period.
As of September 2010, this international bond fund held 220 issues, with 6.01% of its total assets invested in Russian Federation 7.5%
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 fund returned has a three year annualized return of 9.01%.
The international bond fund has a minimum initial investment of $1,500 and an expense ratio of 1.24% compared to a category average of 1.31%.
Putnam Global Income A (PGGIX) seeks current income. Total return over the long term and preservation of capital are secondary objectives. It invests the majority of its assets in investment grade debt securities which have maturity periods of not less than three years. The international bond fund returned 7.63% in the last one year period.
The Fund Manager is D. A. Kohli and he has managed this international bond fund since 1994.
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 funds invest in are rated below investment grade or are unrated. The international bond fund returned 14.7% in the last one year period and has a five year annualized return of 9.59%.
The international bond fund has a minimum initial investment of $1,000 an expense ratio of 1.22% compared to a category average of 1.31%.
To view the Zacks Rank and past performance of all international bond funds, then click here.
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