A recent article at SmartMoney.com promotes the idea of foreign bonds. It notes advantages such as better financial shape of foreign countries (Greece, et al notwithstanding?) and benefits of currency movement. It is a great point, actually, but not totally fleshed out in the article.
There are great benefits to foreign bonds, but we feel that they are better invested in through funds. I try to discuss some of the general benefits and drawbacks in another post. Besides the general lack of transparency in the bond market, the illiquidity of smaller foreign issues may make it difficult to get a good price when in a pinch for the money. Funds offer professional management of a diversified portfolio which may be a little more reassuring than a self-assembled mix of a few bonds.
As always, if you are interested in investing in foreign bonds, talk with a Registered Investment Advisor to see if it is appropriate for you.
Independent, Fee-Only Financial Advisor
