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World Bond Category Rattled by Dollar's Strength

Trade tensions and diverging economic data have prompted a bleak start to the year for the category.

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Alfonzo Bruno: The world bond category can be characterized by a key distinction among the funds that comprise it: those that are mostly U.S. dollar hedged and those that are unhedged. As a result, performance can vary widely across different economic environments, and given the U.S. dollar's strength this year it's a great time to review the world bond category.

The global economy started the year on a synchronous path, yet it has begun to change direction given increasing trade tensions and diverging economic data across the globe. For the first half of 2018, the median world bond fund has declined 1.4%. A myriad of factors has resulted in the third-worst start to a calendar year over the last 20 years for the world bond category.

Alfonzo Bruno does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.