Should I start investing in foreign bond funds?
I think the Vanguard Group is starting a new international bond fund index fund of some type in June or July.
Have you heard about the new fund?
And what are advantages of me diverting some of my intermediate bond funds to this new international bond fund?
Would you recommend it?
I think I read about this new fund on the Money Magazine.
Bond best answer:
Answer by Devin
Advantages? Higher returns obviously. Also an opportunity at more diversification. Lower quoted expenses than any other int'l bond fund I've seen. Typically this is the big downfall of int'l bond funds, they cost about the same as an actively managed fund at ~1+%.
Risk? Rising interest rates in the near future, which is basically a given at this point. Furthermore, international corporate bonds may be quite risky with higher default rates and worst, less reliable accounting info. You must also take country/political risk and currency risk into account. *On further research, it seems Vanguard will be hedging its currency risk with forward contracts, though this is an added expense you will pay for*.
Overall, if expenses are as low as they say they will be, it could be a nice addition to a portfolio.
Bond
PJ Bond @ Fest 10 - 10.28.11-11
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PJ Bond plays the Civic Media Center for Fest 10, Gainesville, FL, October 28, 2011.
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