This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dollar's Bounce Baffles World Bond Funds

Dollar bears seem to have their nose stuck in the honey pot.

World bond funds are the place to be for investors betting against the greenback. Particularly popular are the world bond funds that don't hedge currency exposure. These offerings benefit not only from the steady yield supplied by foreign bonds but also from any currency appreciation against the dollar.

In 2004, investors in unhedged world bond funds saw their dollar pessimism pay off. The dollar slid by 9% against the euro last year and slightly under 4% vs. the yen. That gave investors in these funds spectacular low-double-digit returns -- and accelerated already strong inflows into the sector.

But 2005 has told a different story. Worries over Washington's so-called twin deficits -- the yawning U.S. budget and trade gap -- continue to mount. Yet the dollar has turned the corner, rising 4% against both the yen and the euro.

The dollar's surprising strength has caused world bond funds, both hedged and unhedged, to become Morningstar's worst-performing fixed-income category. The average fund has lost 1.9% this year.

So what's next for the dollar bears and their favorite bond-fund toy?

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $128.95 0.00%
FB $78.99 0.00%
GOOG $537.90 0.00%
TSLA $226.03 0.00%
YHOO $42.51 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs