Global Bond ETFs: A Strategic Hedge Against Domestic Concentration Risk
US fixed income portfolios often suffer from overexposure to domestic debt markets, leaving investors vulnerable to Federal Reserve policy shifts and localized inflation trends. Global bond ETFs emerge as a compelling solution, offering diversification across international interest rate cycles, economic growth patterns, and central bank policies.
Currency volatility remains the double-edged sword of international bond investing. With bond returns typically modest compared to equities, even minor exchange rate fluctuations can erase yield advantages. The decision to hedge or remain unhedged against currency risk becomes a pivotal strategic choice for fixed income allocators.