Author Topic: Foreign Bonds in portfolio  (Read 1286 times)

GorgeousSteak

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Foreign Bonds in portfolio
« on: August 20, 2015, 01:33:05 PM »
I'm curious what people think about including foreign bonds in your portfolio.  If you've decided to include foreign equity funds, why wouldn't you also include foreign bonds at a similar relative percentage to domestic?

Heckler

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Re: Foreign Bonds in portfolio
« Reply #1 on: August 20, 2015, 03:18:29 PM »
http://canadiancouchpotato.com/2014/08/29/ask-the-spud-should-i-use-global-bonds/


I dont see why this logic shouldnt apply to anyone.  Insert your home country instead of "Canadian" in the article.

Unless you live in Greece.

GorgeousSteak

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Re: Foreign Bonds in portfolio
« Reply #2 on: August 20, 2015, 03:47:57 PM »
Thanks for the link Heckler.

Seems like the article is a little hypocritical.  First, their argument was you shouldn't do it because you don't gain any additional return and expose yourself to currency risk, sounds logical enough.  But then they mention that there are funds with currency hedges to eliminate this (which seems to be true of the vanguard bond funds I'm invested in(VTABX) based on its description).

But then at the end, they say if you have a ton of money maybe you should, because then you're protected from the Canadian bond market imploding.  This sounds reasonable, the more you're diversified the less risk you have.  I also don't really see how the decision changes if you have a little or alot of money invested.

I'm kind of thinking same return but more diversification is better than same return all in one countries bonds.

Heckler

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Re: Foreign Bonds in portfolio
« Reply #3 on: August 20, 2015, 04:28:29 PM »
Well, I'm glad I didn't break up our $40K and $10K holdings of VAB, as they both reinvest dividends.  Had I added global as Vanguard almost convinced me to do, I would have more transaction fees and more possibility of DRIP not being high enough to reinvest without fees.

WorkingToBeFIREd

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Re: Foreign Bonds in portfolio
« Reply #4 on: August 21, 2015, 04:59:50 AM »
Had a similar question recently and after some research and Mustachian discussion, decided to just stick with VBTLX and the lower ER....thread link for reference and other external articles....

http://forum.mrmoneymustache.com/investor-alley/vtabx-worthwhile-addition-and-if-so-where/