U.S. Treasuries are, well, lame and they don't offer much in the way of compelling yields. That's unfortunate because many investors either need or want added fixed income exposure within their portfolios.
The good news is that there are myriad options when it comes to international bond ETFs that offer strong yields and the potential for capital appreciation. For some reason, a lot of these fixed income options go unnoticed, but let's change that today and have a look at four international bond ETFs that aren't getting a lot of press.
Market Vectors LatAm Aggregate Bond ETF BONO:
The Market Vectors LatAm Aggregate Bond ETF is still in its infancy after a May debut, but the ETF is off to a decent start with $7.4 million in assets under management. Nearly 79% of the sovereign and non-sovereign debt held by BONO is rated investment graded. Most of the rest is non-investment grade, so there's a good mix of conservative and speculative within this ETF.
Brazil, Mexico and Colombia represent about two-thirds of BONO's country weight. You'll love the 5.5% trailing 12-month yield.
WisdomTree Asia Local Debt Fund ALD:
ALD is an actively managed ETF that made its debut in March. The ETF's 0.55% expense ratio is very fair for an actively managed fund and investors have embraced this ETF, pouring nearly $660 million in assets into it. Most of ALD's holdings are either not rated are investment grade. Country exposures are as follows: South Korea, Malaysia, Indonesia, Philippines, Thailand, India, China, Hong Kong, Singapore, Taiwan, Australia and New Zealand.
SPDR Barclays Capital International Corporate Bond ETF IBND:
Just over a year old, IBND has pulled in $56 million in AUM and currently holds almost 460 international issues. International sort of as the U.S. accounts for 18% of this ETF's country weight. Germany, France, the U.K. and the Netherlands also receive double-digit weights. Three sectors, financials, industrials and utilities, comprise IBND's entirely investment grade holdings.
WisdomTree Emerging Markets Local Debt Fund ELD:
ELD is similar to ALD, but with a broader emerging markets focus. Also home to a 0.55% expense ratio, ELD has attracted $1.4 billion in AUM in 13 months since its debut. Nearly a third of ELD's holdings aren't rated, but most of the rest are investment grade. Country exposures are as follows: Brazil, Chile, Colombia, Mexico, Peru, Poland, Turkey, South Africa, Russia, Malaysia, Indonesia, Philippines, Thailand, and South Korea. Distribution yield: 5.13%.
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