Now that volatility has returned to the capital markets with a vengeance, investors looking for stability in returns might want to look at an income-oriented fund with a secondary focus on capital appreciation. The Templeton Global Bond Fund (TEGBX) invests in bonds of companies, governments, and government agencies located around the world -- and it has a string of consistent returns in recent years, averaging more than 11% over the past five years and more than 8% for the past decade.
- Inception date: May 1, 1995
- Expense ratio: 1.42%
- Net assets: $1.6 billion
- Investment minimums: Regular $1,000
A glance at the top holdings of Templeton Global Bond shows the cosmopolitan nature of the fund. You'll find a nearly 7% holding in a Korea treasury bond, a 6.6% position in a government bond from Sweden, and 4.6% of assets in a French government bond.
Contrast that global focus with a domestic bond fund, such as the iShares Lehman U.S. Aggregate Bond Index Fund (NYSE: AGG ) . There, you'll find bonds of companies that are now infamously linked with the subprime mortgage crisis, including Fannie Mae (NYSE: FNM ) , Citigroup (NYSE: C ) , Freddie Mac (NYSE: FRE ) , and Bank of America (NYSE: BAC ) . The global diversification of Templeton Global Bond provides some insulation to the crisis, with roughly a third of assets in Europe and Africa, another third in Asia, and the rest in the Americas and from multinational issuers.
With the run-up in overseas markets, many investors have dipped their toes into the global arena and included non-U.S. equity exposure in their portfolios. Often, that exposure does not include fixed-income holdings, although the recent downturn in equity markets worldwide has shown the value of including debt in your holdings. Templeton Global Bond fund has solid returns over an extended period of time, and a consistent manager, Dr. Michael Hasenstab, has managed the fund since 2001.
The demonstrated ability to generate positive returns over a 10-year time period -- which includes the dot-com crash and at least a portion of the credit market debacle -- mark this fund as one that should receive serious consideration for an investor's global fixed-income allocation.