4 Disadvantages of Investing in International Bond Funds

Investing in international bond funds can help you diversify your portfolio. However, there are some potential drawbacks that you need to know about. Here are four disadvantages of investing in international bond funds.

1. Outperformed by Mutual Funds

When you invest money into an indexed bond ETF, you are going to run the risk of being outperformed. Many actively managed mutual funds can outperform these types of funds. Therefore, you may not be choosing the best place to put your money.

2. Fees

Many people that invest in these types of funds like to buy and sell shares frequently. When you do this, you are going to incur fees. These fees can significantly cut into the amount of return that is made from the international bond fund.

3. Risk

By investing in this type of fund, you are taking on extra risk. You have to be aware of international market concerns as well as geopolitical and economic risks.

4. Limited Selection

If you want to invest in international bond funds, you are going to find that you have a very limited selection to choose from. While there are hundreds of ETFs to choose from, those that specialize in international bond funds are a little more difficult to come by. 

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