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Global Bonds Are a Passport to Income
MAY 2018

By Lou Carlozo

More than a century and a half before Brexit – the 1820s, to be precise – London's bustling financial district launched an investment vehicle that built railways and bolstered overseas infrastructure: the foreign bond.

There must have been some boisterous boiler fuel in that financial innovation, because as the industrial revolution has passed into the digital age, international bonds have far outlasted steam trains, buggy whips, biplanes – even the exploding Ford Pinto.

Roughly five years ago, foreign bonds moved into the remarkable position of representing a full third of world's capital markets. And today's investors can't help but ponder the possibilities dangled by nations such as China, which with its $11 trillion bond market, represents the world's third largest.

There's at least one thing about foreign bonds that isn't so foreign: how to weigh their place in your portfolio. Experts say bond buyers should have a firm grasp of their own goals and risk tolerance, while taking into account age and income needs.

"Emerging market countries may be riskier to invest in but their higher bond yields could offer better risk-adjusted returns over the long run," says Loren Asmus III, vice president of investment research at Canterbury Consulting and based in Newport Beach, California. "For instance, Brazilian bonds performed well over the last several years as economic growth accelerated and inflation declined."

Read the full article here.