The Opportunity In Developed Market Bonds For U.S. Investors

Seeking Alpha | May 15, 2019 at 11:37 AM
  • Foreign bonds can offer diversification benefits.
  • By buying a low-yielding 10-year bond in those countries with a depressingly favorable backdrop (low inflation, low growth) and hedging the currency back to USD, managers can potentially reduce currency risk, provide diversification and generate an excess annual “yield” on the bond.
  • Foreign securities are subject to additional risks including currency fluctuations, political and economic uncertainty, increased volatility, lower liquidity and differing financial and information reporting standards, all of which are magnified in emerging markets.