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Fund Spy

A Spotlight on World-Bond Funds

This eclectic group offers a wide variety of risk profiles.

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The world-bond category has been one of the fastest-growing fixed-income groups in recent years, both in terms of assets and the number of offerings. Over the past five years, it attracted a lot of new money, ranking fifth after the nontraditional, bank loan, short-term, and ultrashort categories in terms of inflows. As often happens with faster-growing areas of the market, fund companies were quite active in launching new offerings. Nearly 40% of world-bond funds were launched during the period, bringing the total to just under 100 today.

As a result, investors have to contend with a lot of young and unproven choices, not to mention a wide variety of approaches. Some world-bond funds exclude U.S. debt while others are truly global, and there are many levels of emerging-markets exposure within the category. Corporate bonds may play a significant role in some portfolios, while some funds stick exclusively to sovereign debt.

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Karin Anderson has a position in the following securities mentioned above: TPINX. Find out about Morningstar’s editorial policies.