MARYLAND GRANT PROGRAMS FOR HOMEOWNERS ASSISTANCE
3. Changes in currency can boost returns. Since foreign bond funds invest in bonds of other countries, they will in turn invest in other currencies. This risk and opportunity is higher for foreign bonds because a larger portion of the bond's return is derived from changes in currency. A good foreign bond manager will add value in the fund by capitalizing on both currency and bond opportunities. Foreign bond funds are ideal for investors seeking income and diversification. Foreign bond funds, as their name suggests, invest in bonds that pay their interest and principal in a currency other your home currency. Foreign government and corporations issue these bonds.
A foreign bond receives interest and generates income for investors, just like a domestic bond. It will fluctuate in value - declining when interest rates go up, and increasing when interest rate go down. Foreign bonds will also increase and decrease in value when their currency changes relative to your home currency. Investors should consider foreign bonds as an excellent investment alternative.