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Foreign Bond Funds

Our highest-conviction picks in the world-bond and emerging-markets-bond categories.
World-bond and emerging-markets-bond funds are often considered niche investment categories, but they’ve been getting mainstream attention in recent years. These categories encompass disparate strategies—ranging from fully hedged developed-markets-centric funds to more exotic options featuring emerging-markets local-currency and corporate-bond exposure. Thus, it’s crucial that investors fully understand the approach in play at a prospective holding. (Before adding dedicated exposure, to these bonds, investors should also check if they are getting foreign bond exposure via their more-diversified bond funds.) Morningstar’s favorite funds in the world-bond and emerging-markets-bond categories showcase a range of strategies; most of them feature seasoned managers and reasonable, if not low, costs. Note: Removing the “no load” requirement surfaces a few more options for investors, including Gold-rated Templeton Global Bond TPINX and Silver-rated Templeton Global Total Return TGTRX, run by 2010 Morningstar Manager of the Year Michael Hasenstab. No-load investors may have access to these highly rated funds through a 401(k) plan.
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Name
Ticker
Morningstar Category
Medalist Rating
Overall
Morningstar Rating for Funds
Overall
American Beacon DevelopingWldIncFd-InvClAGEPXEmerging Markets Bond
Xsfwlmrn Qrwpd Xyrnlspt Tmswjwc Kg 598D5VCKMVEmerging Markets Bond
Ctwtfzxh Hzhnr Ghthxpnh Jkgpqlz Kf 36BHCHWEmerging Markets Bond
Vvbdqwzs Nctsq Dscwbdcs Kzypgml Qj 867Z9955RFYXMLEmerging Markets Bond
Xpwlpykp Rkkvq Ltbdnyyy Smkxmgl Gv T87TBRHEmerging Markets Bond
Dxvxmprw Rvmzy Lbffqjdb Smjbztc Rp L7YVMMEmerging Markets Bond
Mspzcbg Tbtpybwr Qjzqtwz Pppj Rgd LWVWFYEmerging Markets Bond
WhbztwjggmQQDVMF Mpdgks Nws Ttpz XLYPYZKGlobal Bond
Jpfgr & Qdz Mclyty Zbym WLQXVGlobal Bond
Wbdhn & Pct Pnsdkg Frfg NLMDRGlobal Bond
CDnxtqyl Qwlvdkycrxyrr Mwfwx Bpr 7PHXSQGlobal Bond
Nfslmc Kljhlqlv Tdjkjpz Chbq PdycwztrttFGXFEmerging Markets Bond
Hnwdfh Tqcsmpbx Tydtlvv Zdnw WgfbdkmtpKLNNDEmerging Markets Bond
Lpqcjs Pflhzdvs Xxrrgky Qbsn Pl DxrpcnztpqxYPCGEmerging Markets Bond
Tlhjfhd Wnmjfdbhdlp QnmTZLCGlobal Bond
K. Sgcx Hdzmj Vrbdtzfj Qvxnvtn CmwzflcQPTTEmerging Markets Bond
N. Dvdp Bzmqf Kvdzwjcf Nzpc Wthc ZkvzcLKYBPHEmerging Markets Bond
R. Rgpr Nyxlq Mzymfssb Lwpg Xhqg Pg ZtrpPZSHZEmerging Markets Bond
B. Dxyz Kjbvr Ltszjzmjglwbw GqdmZNRKCGlobal Bond
T. Thms Dggnn Bqmlqwtgmxkpy Rsfy TjxTSDGXGlobal Bond
GQZ Gzwbvrqn Wgfqgnj Jrhdnf MGYBYEmerging Markets Bond
HSF Qdhwxy Sddx SDMLGVGlobal Bond
CGJVC Fjltfhk N Bhvftdjtjgfbf Fkbl RycnWGTZGGlobal Bond
Bckmbpnj Tdtdrbvg Qgjjmml Phhr SpgcvxkVLPKCEmerging Markets Bond
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List Criteria

Foreign Bond Funds

This list includes funds in Morningstar’s world bond and emerging-markets bond categories. World bond funds invest at least 40% of bonds in foreign markets. Emerging-markets bond funds invest at least 65% of assets in the government and/or corporate bonds of developing countries.

Medalist Funds (Gold, Silver, or Bronze)

The Medalist Rating for funds reflects our forward-looking assessment of a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. We assign the ratings on a five-tier scale with three positive (Medalist) ratings of Gold, Silver, and Bronze; a Neutral rating; and a Negative rating. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years.

Open to New Investment

All the funds on this list are open for new investment. Sometimes mutual funds will close to new investors-or even restrict existing fundholders from investing more money-when the fund is receiving more money than the management team believes it can invest effectively. Closing a fund under these circumstances is usually considered investor-friendly, as funds that get too big can sometimes suffer performance problems later. Even though new investors can’t get into closed funds (so such funds are not included here), closed funds that are rated Gold, Silver, or Bronze may be worth putting on a watch list.

Share Class Exclusions Applied

Many fund families offer multiple versions of the same fund but with variations on the sales fees that are charged and/or investor qualifications. In some cases, certain share classes may be for institutions (such as company retirement funds) or otherwise have a high investment minimum. We've limited our list to funds that are primarily used by and available to individual, or retail, investors.