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Int'l BOnd Funds - Hedged?
Old 12-13-2006, 11:51 AM   #1
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Int'l BOnd Funds - Hedged?

I'm thinking I want a smallish exposure to foreign debt. I'm only interested in higher quality debt from developed countries or developing countries with developed & transparent markets. My horizon is pretty long so I can tolerate moderate volatility.
Given funds of similar portfolios would you pick hedged to $US or unhedged?
Thx===
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Re: Int'l BOnd Funds - Hedged?
Old 12-13-2006, 12:00 PM   #2
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Re: Int'l BOnd Funds - Hedged?

I'd pick unhedged. Something like BEGBX would probably do it.
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Re: Int'l BOnd Funds - Hedged?
Old 12-13-2006, 01:07 PM   #3
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Re: Int'l BOnd Funds - Hedged?

Thanks Brewer - what's your take on PFBDX, RPIBX, and LSGLX, all M* picks? Not that their insight is better than yours...
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Re: Int'l BOnd Funds - Hedged?
Old 12-13-2006, 01:11 PM   #4
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Re: Int'l BOnd Funds - Hedged?

They all look pretty similar, but they are all more expensive than BEGBX. The PIMCO fund has a short history, and the other two have (slightly) underperformed BEGBX lately. I don't think any of them are terrible, but BEGBX is the cheapest and has a good manager/track record.

Actually, I like GIM the best, but not at a 5+% premium to NAV.
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Re: Int'l BOnd Funds - Hedged?
Old 12-13-2006, 01:14 PM   #5
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Re: Int'l BOnd Funds - Hedged?

Gotcha - thanks.
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Re: Int'l BOnd Funds - Hedged?
Old 12-13-2006, 01:20 PM   #6
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Re: Int'l BOnd Funds - Hedged?

Quote:
Originally Posted by brewer12345
I'd pick unhedged. Something like BEGBX would probably do it.
Brewer,

I've owned BEGBX for a few years and originally sought it out because it was classified as unhedged as you indicated.

However I noticed in a recent prospectus that they reserve the right to hedge up to 25% of the fund's foreign currency exposure. I couldn't find any clear statement of exactly how much (if any) they were actually hedging, but I wondered if you had any additional insight on this. Is this a recent change? I don't remember seeing it before. Or is it simply a "keep your options open" clause that's always been there that they rarely use?

Jim
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Re: Int'l BOnd Funds - Hedged?
Old 12-13-2006, 01:22 PM   #7
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Re: Int'l BOnd Funds - Hedged?

AFAIK, it is a "keep your options open" clause. Most mutual funds intentionally have very wide atitude in their prospecti despite the fact that most of them never get near any of the limits.
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Re: Int'l BOnd Funds - Hedged?
Old 12-13-2006, 01:38 PM   #8
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Re: Int'l BOnd Funds - Hedged?

That's what I was hoping... Thanks!
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