Vanguard’s research has found that international bonds reduce portfolios’ ups and downs without hurting the total return. “This broad exposure is important, as the factors that drive international bond prices are relatively uncorrelated to those that drive prices in the U.S.,” the report said. Lately, for example, South Korea’s 10-year government bond is yielding 2 percent, while Mexico’s is yielding nearly 7 percent. The international bond slice of Vanguard’s target-date funds is invested in the Vanguard Total International Bond Index Fund, which owns mainly developed-world bonds. Like many international bond funds, it uses hedging to protect its shareholders against the return volatility that currency fluctuations can cause.

Source: International New York Times April 08, 2021 14:00 UTC