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International bond funds
Old 01-18-2012, 04:47 PM   #1
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International bond funds

Vanguard is getting ready to roll out two new international bond funds. One is a total international bond index fund and the other is emerging markets government bond index fund. Does one need to perhaps add something like these to further diversify their bond fund component?
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Old 01-18-2012, 05:56 PM   #2
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I think I recall seeing some Boglehead people claiming the intl' bond funds would be hedged so it would eliminate the currency diversification if that is the case - for better or worse.

To answer your question - I just say it depends on how much slicing and dicing you want to do & how much rebalancing you want to do each yr. As people around here have shown, you can get by with a very simple allocation that doesn't include foreign bonds.

On a side note if you are a timer + slicer/dicer with bonds, Rob Arnott's top allocation move for '12 is emerging mkt bonds. He claimed that the emerging country bonds were being dragged down by the bad news in Europe w/o justification & offer attractive returns. He's a pretty smart guy.
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Old 01-18-2012, 07:40 PM   #3
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I think I recall seeing some Boglehead people claiming the intl' bond funds would be hedged so it would eliminate the currency diversification if that is the case - for better or worse.

To answer your question - I just say it depends on how much slicing and dicing you want to do & how much rebalancing you want to do each yr. As people around here have shown, you can get by with a very simple allocation that doesn't include foreign bonds.

On a side note if you are a timer + slicer/dicer with bonds, Rob Arnott's top allocation move for '12 is emerging mkt bonds. He claimed that the emerging country bonds were being dragged down by the bad news in Europe w/o justification & offer attractive returns. He's a pretty smart guy.
Thanks for your reply. As for timing, slicin, and dicin, I think I'll stay the course with simplicity.......Van Total Stock, Int, Bond.
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Old 01-18-2012, 07:44 PM   #4
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Gosh! The situation in Europe doesn't make me want to have any of my money in international bonds. What percentage would be Greek, Italian, Portuguese? Well, you get my point.
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Old 01-18-2012, 08:13 PM   #5
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Gosh! The situation in Europe doesn't make me want to have any of my money in international bonds. What percentage would be Greek, Italian, Portuguese? Well, you get my point.
Well, OTOH, the shoe was on the other foot in 2008 during the US debacle. I guess that is why we diversify and rebalance.
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Old 01-18-2012, 09:00 PM   #6
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Well, OTOH, the shoe was on the other foot in 2008 during the US debacle. I guess that is why we diversify and rebalance.
Well....I'm not sure our situation was quite as dire. Didn't hear any talk about US Bonds being in danger of default (except to the degree that the politicians played games with the debt ceiling.) Nor did we need a bailout from other countries.

I agree with what you said about diversification and rebalancing. In my own case, I'll take the international risk on the equity side, not on the debt side.
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Old 01-18-2012, 10:30 PM   #7
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Just came back from a conference and heard a bond manager speak from Loomis Sayles. She felt that there were good opportunities in Europe, particularly in infrastructure. I don't think indexing is the way to go in foreign bonds at this time but I think with the right management they can provide some good diversification and potentially better returns.
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Old 01-19-2012, 09:48 PM   #8
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VG just announced they are going to delay the release of the 2 new int'l bond funds. That is supposedly the 2nd false start.
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Old 01-20-2012, 06:25 PM   #9
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VG just announced they are going to delay the release of the 2 new int'l bond funds. That is supposedly the 2nd false start.
In my mind there's got to be a reason for this delay/ Stay tuned and do your homework.
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