IndependentlyPoor wrote:Correlation for FNMIX and VTSMX is 0.372 for 3464 trading days since 6/21/1996.
squawk wrote:Performance of TEGBX and FNMIX over the past 15+ years has been excellent (>12%).
dkdoy wrote:Good quote from Rick Ferri on foreign bond funds
"Foreign bonds provide currency diversification rather than security diversification, and they do it at a high cost. You can invest in US bonds via the Vanguard Total Bond Market and pay about 0.14% in fees. Or, you can divert some of that money into global bond fund that charges 0.50% in fees or more. Consequently, whatever benefit may be gained from currency diversification is wiped out by the higher fee.
In conclusion, theoretically foreign bonds may make sense; operationally they lose all their luster. "
DaveS wrote:How would you like it if you had diversified into Greek Sovereign bonds last year? Dave
DaveS wrote:How would you like it if you had diversified into Greek Sovereign bonds last year?
Does anyone have any strong pros or cons for the category?
squawk wrote:From my limited understanding of foreign market bonds, many are dollar dominated due to past currency crashes.
The diversification factor is basically a risk premium on EM Governments vs. Developed Governments.
EM's crashed heavily in the 80's and 90's resulting in a higher risk premium since then.
The question is: will it remain?
I think it will because investors will always be more hesitant to lend to the government of Russia versus US Governments.
I am still neutral on them -- looking for more input
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