A reader asked about what the “little guy” should look for in trying to access foreign bonds.

Assuming the question of how is answered with a fund of some sort I would want to see exposure to all sorts of different countries not just very high yielding paper. With a bond fund I would be happy with little to no price appreciation and a fairly steady yield that was at a premium to US treasuries.

It seems like the yields in a lot of places are higher than in the US so I would think it would be possible to weave together high yielders and low yielders, deficit versus surplus, importers versus exporters, emerging versus developed and so on to offset, as opposed to hedge, currency movements.

Obviously if the dollar continues to be weaker against every currency (longer term trend) then there would be some price appreciation and if the dollar snaps back (very recent trend) then these funds would likely face some price erosion.

If I were looking for a broad based foreign bond fund that is what I would look for and in lieu of that ideal I suppose I would look for something that I thought came close to that ideal. If that ends up being an actively managed fund for you then you obviously face the risk that the manager does something a little different in the future or that the fund gets a new manager.

Last 5 posts by Roger Nusbaum

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