Buying foreign debt (bond, fund, Fidelity, invest)

[Veneficus]

Looking to diversify a bit and get away from overpriced equities, and with all the doom and gloom (eurozone, Russia, etc.) this looks like it may be a good time to purchase foreign debt. Anyone have any experience or know where to get started as a small private investor? Thanks.

edit: I have a very high risk tolerance.

[arctic_gardener]

I know you said debt and not equities, but Indian equities are widely expected to return 15-25% this year. I parked 20% of my equity portfolio in India-linked ETFs to take advantage of it (and I have a 65/35 allocation, so it's 13% of my entire portfolio).

[MrQ2]

What's the name of the ETF if you don't mind me asking?

[mysticaltyger]

Originally Posted by Veneficus

Looking to diversify a bit and get away from overpriced equities, and with all the doom and gloom (eurozone, Russia, etc.) this looks like it may be a good time to purchase foreign debt. Anyone have any experience or know where to get started as a small private investor? Thanks.

edit: I have a very high risk tolerance.

You might want to look at an emerging markets bond fund. Something like Fidelity New Markets Income or T. Rowe Price Emerging Markets Bond.

For something more broad based (not just emerging markets), there's Dodge & Cox Global Bond. This is a new fund, but all of D&C's other funds have great long term performance...and they are keeping the expense ratio to .60% or less, which is cheap for this category. I expect the D&C fund to have lower returns because it's more conservative, but it can also invest in emerging markets bonds as well as below investment grade bonds.

If you have at least 50K and use a broker, I think you can buy Templeton Global Bond (TGBAX). Great long term returns, although a bit lackluster last year. The last several years it's had almost nothing in the US and has only kept a minimal amount in developed markets because of ultra low interest rates. It focuses more on government bonds, though...doesn't invest much in corporates.

Another option is Loomis Sayles Bond. It does some currency plays and is pretty aggressive, but it does have restrictions as to how much it can invest abroad and in below investment grade. But it does have great returns if you can stomach the expense ratio of .91%. If you have 100%, the ER drops to a more reasonable .63%.

[arctic_gardener]

Originally Posted by MrQ2

What's the name of the ETF if you don't mind me asking?

I live in Canada, so I bought XID, listed on the TSX. For the NYSE, an equivalent ETF in US dollars is INDY.

XID has already gained 8% since the New Year, so I expect there will be a correction shortly.

Here's the 1-month chart for INDY: a gain of 11%.

http://www.bloomberg.com/quote/INDY:US

[Big-Bucks]

overpriced equities

S&P is at about a 20 P/E ratio, which is high but look at what is keeping it going. CD's pay peanuts. People fear bonds because of low interest rates. Money from Europe is looking for safety in the US.

QE is also propping up the market. People always assume that it will stop at the next meeting. They might keep it going and going. I don't think the Fed will allow the market to crash. They're looking out for retiree portfolios.