Fri 28 Jul 2006
Given the bond flavor of our recent posts, I thought it might be interesting to talk about the bonds of other countries.? The US isn’t the only stable, developed nation offering bonds but I think we tend to forget (surely it’s not patriotism) that.? In particular, check out?this post about the potential for UK bonds or being long the Pound in general.? If the macroeconomics of a government are part of why you do or do not buy a bond, then why not look for better macroeconomics for your money?? I can understand that it requires more research to learn about someplace so far away but it might be well worth it.? I need to look into the correlations however with the US bond market because you should never underestimate the power of the US influence on the globe.
July 28th, 2006 at 10:44 pm
The big drawback for me is the difficulty of investing in international bonds and the requirement to go to a full service broker (or a foreign based broker). I’m sure the spreads are not narrow, and I’m such a small customer that I will get the ass-end of any real offering.
It looks like there are quite a few ETFs and mutual funds that focus on global income, so there are probably plenty of possibilities in that space (see etfconnect.com for many choices).
I’m not sure I am enthralled with the prospects for bonds domestically or globally. The US does tend to drag the rest of the world along with it — we’ve seen it most recently with all the central banks playing follow the leader with rate hikes.
Smaller countries (outside the US, Euro, Japan) might be the best opportunity.
I also have a feeling that exchange rates will add volatility to the “stability” of international bonds. You may be able to preserve the purchasing power of your money, but you’ll go along for a rollercoaster ride.
July 28th, 2006 at 11:34 pm
Simply put, international bonds are something I’d be interested in once my investments cross the multi-million dollar mark. I’d need some kind of impetus to motivate me to do the research and ongoing maintenance it would take to make dabbling in foreign bond markets a consistently successful venture.
Here’s a painfully simplistic idea: create a business with the purpose of international investing, then expense the crap out to cover all your international travel and related expenses. That takes the whole argument about “learning about foreign investment options is just too much work” and turns it on it’s head.
I can definitely see myself traveling to London/Paris/Rome/etc and the surrounding area multiple times per year on business trips to learn all I can about the “flavor” of the markets there.