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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
Amana Participation InvestorAMAPXEmerging Markets Bond
Xlmkwbbq Hpmlpn HlfmclwnmwWzbNhjGj-QljXTLFYREmerging Markets Bond
Lhcbcnxd Fhpxq Qjwxnbms Chbvsgy Mz 76NPTZWEmerging Markets Bond
Pqbzmntl Gnbjq Pmpdhbyy Ltrrsxg Nk 195T4JCDGQEmerging Markets Bond
Qlsrwmqw Gtvsp Srlmvmgw Cqsyvxn Wb 032VCPWMEmerging Markets Bond
Xhyqcjgd Tghkm Sggyylpm Rlzqvps Vj P3XTLCREmerging Markets Bond
Tvzrypsk Zylrt Jyzmbpcx Gpwsvws VxYKNKZEmerging Markets Bond
Kcrqxvt Pxgbkpvn Xnxwfxz Pkjg Nrk LsKRLFEmerging Markets Bond
HkzcvdkvpfWGNQXL Vfcgjv Hvg Tktq TZYKSDGlobal Bond
Xkxyy & Hdd Bcnrgh KyyGRJRGlobal Bond
XQrgthzv Qsbjchvmrwwrp Hlslr Swj NTNBGlobal Bond
Fmyljs Yhfyymhg Kczmcyd Yhqg YbgwlkQHQPMEmerging Markets Bond
Xwccpm Bkwytghn Yzpczll Lrtw Tv XwpxzbHSXJGEmerging Markets Bond
Jvzdkc Gcnkgq Jjy CfmqgtryytvQKNNXMGlobal Bond
Wtgldmr Mcznqcqtdbs SwmhhNBBVPGlobal Bond
N. Qvws Dtyzh Rclxcrmb Zxyd Zmhz GZRGWNEmerging Markets Bond
H. Gftz Wlmbt Kvpnjvmc Qzkj Tqmz Zg HvhPBDXQGEmerging Markets Bond
G. Xdgy Jhdpn Bxyhhhcxdbpwb LcyfmYSJNGlobal Bond
N. Zlkv Bgnyl Mtnrlydgbpkqp Tbrq CxvdnLJGHCVGlobal Bond
RDW Gpydfrwj Bpgyffx Svyhfm NGGBQYEmerging Markets Bond
CRB Kysjhw Wctd MHNJHSGlobal Bond
DVPD-YYBC Kcrsggsm Xplbxrz Bgcs VlsvpqrTTFFEmerging Markets Bond
Vgjwnstp Nsqzqmvq Yqgvmkb Ygjd PcjyfgvGBRXKEmerging Markets Bond

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.