In the last twelve hours I have had one email and one comment on the blog about foreign bonds (the email also asked about foreign currency exposure too).
I can not imagine that an individual investor would be better off buying an individual issue as opposed to some sort of product that owns foreign bonds. In many cases there are high minimums for a domestic broker to take an order. While I am not sure what the minimums might be, how many people should put $100,000 into one foreign bond?
I look at this part of the market as trying to capture a particular effect that becomes more important in the face of problems in the US. There are plenty of funds (OEF and CEF) that are easy to access and relatively cheap (you are not going to find a fund that charges 8 beeps like an S&P 500 fund).
The currency OEFs do have some merit but over longer periods of time they may not move a whole lot. Given that I view currency investments as aggressive cash, lots of movement may not be desireable. I would encourage anyone to learn about the currency ETFs. They will not be right for every one, clearly, but there is no harm in studying and considering them.
Random thought, what has happened to ESPN? How much viewer demand is there for paintball, dominoes and poker?
Wikinvest Wire
9 comments:
I researched this very question some years back. There are doubtless less volatile alternatives now such as the currency ETF's but regardless I only found two international bond funds that met my criteria: (a) intermediate duration, high quality bonds; (b) primarily in countries w/ currencies not pegged to US dollar; (c) little or no currency hedging; (d) expense ratios below 1% and (e) no sales fees (full no-load):
1. American Century Int'l Bd (BEGBX);
2. T Rowe Price Int'l Bd (RPIBX).
Both are OEFs. BEGBX has the higher return over the past 5 years but it has also been somewhat more volatile (it is completely unhedged WRT currency risk AFAIK). Now that support for the $USD seems to eroding they are certainly an option but a number of countries seem to be in a rising interest rate environment themselves which would probably make the currency ETF's a less risky play (ISTR they use short duration instruments?).
Many of the asia exJapan markets have dividend paying stocks with higher yields than the local govet. bonds. Perhaps those looking for non dollar yield should look at wisdom tree's new dividend weighted etf's based on foreign markets.
RW, good stuff.
The currency ETFs are overnight deposits in the foreign currencies held at JP Morgan. The interest paid is commensurate with the over night rates of the respective countries.
to anon, you are not wrong but I took the questions asked to pertain to the fixed income portion of diversified portfolios as separate from the equity portion.
I maintain foreign exposure in both stocks and bonds for clients.
I was hoping on some discussion of ESPN
ICPHX
Which ESPN are you watching?
ESPN
ESPN 2 ("The Duece")
ESPN Classic
ESPN News
ESPN en Espanol
Did I leave any out?
Honestly, all of the cable channels that started out with a niche have blurred those boundaries in an attempt to be something to everyone.
ESPN has so many channels that they have to fill them with lacrosse and hot dog eating contests. Pretty soon bank robberies will become a sport.
Don't understand the interest rate game. The Feds keep raising the short term rates, but the 10-year notes go the opposite way. How do I figure that one out?
funny ESPN comments
Usually (take that with all caveats) at the end of an economic cycle the yield curve flattens and some times inverts. This is very normal and has happened repeatedly.
The slope of the curve supports the notion of the cycle being close to over. It does not have to mean it is over but it is an indicator.
Is there a playstation version of dominoes? IMO it is looking like another small rally thru July then in the tank thru Oct. Short the DOW above 11500? Tom in Indy
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