Emerging Market Bonds Offer Diversification Benefits

By on April 11, 2009

William Samuel Rocco at Morningstar has written an article highlighting the virtues of holding emerging markets bond funds in a portfolio. Emerging markets bond funds have different country weightings than emerging markets stock funds and therefore offer enhanced diversification.

Rocco writes, “Indeed, the typical emerging-markets bond fund has a R-squared of just 26 versus the MSCI EAFE Index and 24 versus the S&P 500 Index over the past 15 years, indicating practically no correlation between their performance.”



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