No. of Recommendations: 1
uglierthanme writes:
Is this thought of as a good way to diverse? It would be invested for at least 10 years and would be no more than 10% of my total portfolio. The one fund that I am aware of is through Putman, and has a fairly good long term past history and managable expenses

The following website may help you with your decision process:


"Diversification Benefits
Why would you invest in the debt of a country half way around the globe when there are many debt issues right at home? Diversification is one good reason. Holding foreign bonds or shares of foreign bond mutual funds, in addition to U.S. debt issues, may help you to reduce the risk of price fluctuations and potentially increase earnings. According to a study by Standard & Poor's, investors who invest between 20% and 30% of their fixed-income assets in foreign bonds generally realize slightly higher returns and lower risk than investors who invest solely in U.S. bonds.* The reason: When the American market is on its way down, other overseas markets may be on their way up.

While the U.S. and foreign bond markets have not consistently moved in sync in the past, you should be aware of a developing trend. In recent years, as international agreements have begun to knock down trade barriers and we have approached a more global economy, the correlation between the American and foreign bond markets has decreased. From 1986 through 1990, the correlation between international bonds and U.S. bonds was 0.29, according to Standard & Poor's. Between 1998 and 2001, the correlation rose to 0.54. The closer the correlation moves to 1, the greater the likelihood that the U.S. and foreign markets will move in the same direction.

Remember, too, that as much as one-quarter of the holdings of a global bond fund may consist of U.S. bonds, potentially increasing the correlation between the American market and foreign markets."


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