Top 5 International Bond Mutual Funds - Best of Funds

International bond markets presently constitute more than half of the available fixed-income investment opportunities worldwide. This includes bond issues from emerging economies and non-government entities, such as European corporations. Since interest rate fluctuations differ from country to country, international bonds are another way to balance downturns in the U.S. markets. Further they help in diversifying currency exposure and protecting assets against a long-term secular decline in the U.S. dollar.

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.

American Century International Bond (BEGBX) seeks high total return. The fund invests heavily in foreign fixed-income securities issued by governments and firms. The dollar weighted average maturity period of its portfolio is between two to ten years. Not more than 25% of its assets may be held as U.S. dollars as a hedge. The international bond mutual fund returned 10.97% in the last one year period.

The international bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.81% compared to a category average of 1.12%.

Federated International Bond A (FTIIX) invests the majority of its assets in debt securities issued by foreign firms and governments. The securities must be rated investment grade and denominated in currencies other than the dollar. A maximum of 10% of its assets may be utilized to purchase fixed-income securities rated below investment grade. The international bond mutual fund has a ten year annualized return of 7.67%.

Ihab Salibis the fund manager and has managed this international bond mutual fund since 2002.

MassMutual Premier International Bond A (MMNAX) seeks high total return. The majority of the fund's assets are utilized to purchase fixed income securities issued by foreign entities. Not more than 20% of its assets are invested in emerging market securities. The international bond mutual fund returned 11.12% in the last one year period.

The international bond mutual fund has an expense ratio of 1.20% compared to a category average of 1.12%.

Invesco International Total Return A (AUBAX) invests heavily in a wide range of foreign government and corporate debt instruments as well as in foreign currency. The fund may utilize derivatives to manage risk or enhance return. Not more than 30% of its assets may be utilized to purchase dollar-denominated securities. The international bond mutual fund has a three year annualized return of 7.6%.

As of June 2011, this international bond mutual fund held 65 issues, with 8.01% of its total assets invested in Euro-Schatz 2 yr.

GMO Emerging Country Debt IV (GMDFX) seeks current income along with capital growth. The majority of its assets are invested in emerging market debt securities issued by governments. It may also invest in companies with economic linkages to emerging markets. The international bond mutual fund has a five year annualized return of 9.59%.

The Fund Manager is Thomas Cooper and he has managed this international bond mutual fund since 1994.

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.