Exploit Weak Dollar With a Foreign Bond ETF

The average maturity of the fund is 7.6 years and the duration is 5.73% years. To give some frame of reference for yield at that maturity/duration, the iShares Lehman 3-7 Year Treasury Bond Fund(IEI Quote), which is a domestic fund, has a yield of 4.39%. BWX's credit quality averages AA2, which should not be surprising or that important, as all the holdings are sovereign debt.

There are a lot of good fixed-income destinations that have little or no representation in BWX, such as Australia, Ireland, Norway and Finland. So, while BWX strikes me as a worthwhile product that can provide exposure to an important asset class, I do not think it works as a stand-alone for foreign bonds.

Buying individual foreign bonds to mix with a broad-based fund like this is probably out of reach for most do-it-yourselfers, because minimum orders tend to be $100,000. And, for now, most of the pooled investment products that invest in this assets class are broad-based developed market closed-end funds or emerging market closed-end funds. However, some of these funds do make concentrated bets on certain volatile, high-yielding countries.

A strategy that could work very well would be to use BWX as a core holding, pairing it with (FAX Quote)Aberdeen Asia Pacific Income Fund (FAX), which has an usually heavy weighting in Australia and yields 6.73%, and an emerging-market fund like (EDD Quote)Morgan Stanley Emerging Markets Domestic Debt Fund (EDD), which is heavily weighted toward Brazil and Turkey, yielding 8.93%. I wrote about EDD for Real Money, TheStreet.com's subscription Website, last month.