Emerging markets bond funds may appeal to investors with long time horizons and a tolerance for risk. For such investors, holding 5 percent-10 percent of their bond allocation in these funds can add to total returns, over time. Recommended funds include:
- PIMCO Emerging Markets Bond Fund
- Fidelity New Markets Income Fund
- MFS Emerging Markets Debt Fund
- Scudder Emerging Markets Income Fund
All of these companies have deep, experienced research departments. When you invest in emerging markets there are large differences from one country to another so you need a research team to choose among them.
PIMCO, in particular, has an excellent record for actively managing fixed-income investments. What’s more, this research-intensive category has high expenses (averaging over 1.5 percent a year), the highest for any type of bond fund, so the Fidelity fund starts out with an advantage because of its 1 percent expense ratio.
