Author Topic: international bond fund?  (Read 2623 times)

kib

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international bond fund?
« on: January 09, 2015, 03:26:34 PM »
I know it's suggested that international stock funds / an international index fund should be included in a diversified portfolio, but does anyone have an opinion on international bond funds?

Heckler

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Re: international bond fund?
« Reply #1 on: January 12, 2015, 12:18:59 AM »
https://www.vanguardcanada.ca/documents/product-guide-en.pdf


Vanguard Canada recommends international bonds in their balanced portfolios.  I'd love to hear some opinions before I pull a fairly large trigger.  Diversification makes sense to me.

Dodge

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Re: international bond fund?
« Reply #2 on: January 12, 2015, 09:08:33 PM »
General opinion is that it's not really necessary.  Here's a good review:

"It is always tempting to add additional funds to the Three Fund Portfolio and overlook their additional costs and complexity. International bonds represent a large asset class which Vanguard added to their Target and Life-Strategy funds so their new Total International Bond Fund deserves a look.

It is notable that Vanguard added only a small amount of the new bond fund to their Target and Life Strategy funds. Total International Bond fund represents only 2.0% of the 2060 Target Fund and only 4.0% of the Life Strategy Growth Fund. It's largest allocation is 14% in the Target Retirement Income fund. These allocations are nearly meaningless.

Adding another fund inside a single Target or Life-Strategy fund adds no complexity to the investor. However, I doubt if it is worth complicating The Three Fund Portfolio with another small fund containing several disadvantages: More political risk; higher expense ratios (.23% and .20% Adm.); longer duration (6.6 years) and relatively week credit quality compared with Total Bond Market which is already in The Three Fund Portfolio to provide safety and income.

Best wishes.
Taylor"

Source: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=88005&p=2150228&hilit=international+bonds#p2150228

innerscorecard

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Re: international bond fund?
« Reply #3 on: January 13, 2015, 01:27:51 AM »
General opinion is that it's not really necessary.  Here's a good review:

"It is always tempting to add additional funds to the Three Fund Portfolio and overlook their additional costs and complexity. International bonds represent a large asset class which Vanguard added to their Target and Life-Strategy funds so their new Total International Bond Fund deserves a look.

It is notable that Vanguard added only a small amount of the new bond fund to their Target and Life Strategy funds. Total International Bond fund represents only 2.0% of the 2060 Target Fund and only 4.0% of the Life Strategy Growth Fund. It's largest allocation is 14% in the Target Retirement Income fund. These allocations are nearly meaningless.

Adding another fund inside a single Target or Life-Strategy fund adds no complexity to the investor. However, I doubt if it is worth complicating The Three Fund Portfolio with another small fund containing several disadvantages: More political risk; higher expense ratios (.23% and .20% Adm.); longer duration (6.6 years) and relatively week credit quality compared with Total Bond Market which is already in The Three Fund Portfolio to provide safety and income.

Best wishes.
Taylor"

Source: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=88005&p=2150228&hilit=international+bonds#p2150228

I totally agree. At some point, additional complexity is not necessary. You only need enough diversification across asset classes so that you can sleep at night. You don't need so much that the complexity itself will make your life harder, rather than easier. Having a plan you can follow, and understanding what it is that you own, are much more important for individual investors.

GGNoob

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Re: international bond fund?
« Reply #4 on: January 13, 2015, 08:04:06 AM »
I also agree that an international bond fund is not needed. You would be pretty safe to just stick with a total US bond fund.

James

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Re: international bond fund?
« Reply #5 on: January 13, 2015, 08:26:56 AM »
I don't see a need for international bond fund, at some point diversification just means having less assets in higher growth investments. I would skip it, throwing a few percent here or there just to spread things out isn't my style. But doesn't make it wrong as long as it's a very small amount, just don't expect much return which may delay FI.