Investing in Foreign Bonds

September 2026

As US-based investors seek opportunities to enhance returns and further diversify their portfolios, they may evaluate allocating assets to foreign bonds.

The appeal is straightforward: access to a large and diverse fixed income market outside the US, with exposure to different issuers, currencies, yield curves, and monetary policy regimes. This paper examines debt securities issued in developed foreign markets, reviews performance on both an unhedged and currency hedged basis, evaluates historical diversification benefits and risks, and discusses practical considerations for investors considering an allocation to foreign bonds within a broader global debt portfolio.