What are the Best Foreign Bond Funds?

Foreign bond funds can be very profitable, if you pick the right ones. These are funds that focus on bonds from companies in other countries, as the name implies. Obviously investing in individual bonds is another option, and is very often more profitable. However, bond funds take a significant amount of risk out of play for the average investors.

The truth is, bonds are known as being safe investments, but this is not always the case. The reality is, many companies that give out these bonds are not doing well financially, and they often give the bond specifically to help them get needed money. Obviously these kinds of bonds come with higher interest rates, to attract investors.

However, there is a good chance the company will default on the bond payment, if they cannot afford it.
In other words, some bond funds are safer than others. Which you invest in really depends on your goals. For instance, if you are looking for a long term, high return on investment fund, you might focus on higher interest rate funds. These would be riskier, but also more profitable.

If you simply want a fund you can put money in for a year or two until you retire, than the low interest rate funds are definitely the way to go. They tend to focus on larger, more stable companies, and for this reason the default rate is much less. Therefore, these funds do not experience the significant drops in price that riskier funds do.

Also, you need to think about what specific countries you want to invest in. All foreign funds are not created equal. For instance, some of them focus on a combination of American stocks with other companies, and these would be global funds. Then, there are others that focus exclusively on firms that are found in foreign exchanges, which are known as international funds. Then there are sub-sets of international funds, which only target companies in
specific areas of the world (i.e. Middle East, Asia, etc).

The bottom line is, you have plenty of choices for which foreign bond funds to go with. Which bond mutual funds you pick really depends on where you are in life, and your investment goals. Just take your time, compare them thoroughly, and go with one that works for you.