Top 5 International Bond Mutual Funds - Best of Funds

The U.S. bond market has figured only infrequently among the top-performing markets worldwide in the recent past, and investors can no longer ignore the lure of parking their funds in foreign countries. Investing in foreign bonds greatly enhances the prospects of exposure to the best-performing foreign markets worldwide. Foreign bonds can also help to diversify currency exposure and such securities also provide protection against a long-term secular decline in the dollar. Mutual funds are a convenient way to give one's portfolio the desired international fixed-income exposure.

Below we will share with you 5 top rated international bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all international bond funds, then click here.

GMO International Bond III (GMIBX) seeks to outperform its benchmark, the J.P. Morgan Non-U.S. Government Bond index. The majority of the fund's assets are utilized to invest in bonds, either directly or through other GMO funds or derivatives. The international bond mutual fund returned 17.66% in the last one year period.

Thomas Cooper is the fund manager and he has managed this international bond mutual fund since 1993.

Columbia Emerging Markets Bond A (REBAX) invests the majority of its assets in emerging market securities with generate fixed income. The fund may also consider for investment companies which derive a significant portion of their revenues from emerging markets. The international bond mutual fund has a three year annualized return of 12.73%.

The international bond mutual fund has a minimum initial investment of $2,000 and an expense ratio of 1.31% compared to a category average of 1.30%.

Loomis Sayles International Bond A (LSIAX) seeks high total return. At least 65% of the fund's assets are utilized to purchase international bonds. It focuses on acquiring investment grade bonds and not more than 35% of its assets may be invested in junk bonds. The international bond mutual fund returned 18.56% in the last one year period.

Lynda L. Schweitzer is the fund manager and she has managed this international bond mutual fund since 2008.

Goldman Sachs Local Emerging Markets Debt A (GAMDX) invests a large proportion of its assets in emerging market securities issued by governments or corporations. Not more than 20% of its assets may be utilized to purchase fixed-income securities not issued from emerging markets and currency instruments. The international bond mutual fund returned 17.9% in the last one year period.

As of March 2011, this international bond mutual fund held 70 issues, with 26.62% of its total assets invested in Gs + Co Joint Acct Ii Repo.

PIMCO Emerging Local Bond (PEBLX) seeks total return. The fund invests the majority of its assets in fixed-income securities denominated in currencies of emerging markets. The fund may also invest in options, futures and swap instruments. The international bond mutual fund has a three year annualized return of 11.31%.

The international bond mutual fund has an expense ratio of 1.15% compared to a category average of 1.30%.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.