Top 5 International Bond Mutual Funds (Jan. 2011)

The international bond market has come to represent a particularly lucrative opportunity for investors. Though the U.S. bond market continues to attract investors, it has featured infrequently among the best performing international markets. Today international markets represent more than half of the world’s fixed income investment opportunities. Further, the presence of foreign fixed income securities in a portfolio helps protect capital invested against currency fluctuations. 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.

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 14.03% 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%.

JPMorgan Emerging Markets Debt (JEMDX) 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 has a ten year annualized return of 10.24%.

Pierre-Yves Bareau is the fund manager and has managed this international bond mutual fund since 2009.

Federated International High Income A (IHIAX) seeks current income with capital growth as a secondary objective. The fund 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 9.1%.

As of September 2010, this international bond fund held 74 issues, with 7.14% of its total assets invested in Argentina Rep 8.28%.

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 18.23% in the last one year period and has a five year annualized return of 7.51%.

The international bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.10% compared to a category average of 1.20%.

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. The international bond fund returned 13.28% in the last one year period.

The Fund Manager is Michael Conelius and he has managed this international bond mutual fund since 1995.

To view the Zacks Rank and past performance of all international bond funds, then click here.

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