Ryan has been taking on more risk lately, buying issues from Argentina, which yield more than 14%. "Argentine bonds have gotten too cheap relative to the risk," he says. Another strong performer is the TCW Emerging Markets Income Fund ( TGEIX), which returned 13% annually during the past decade. To limit risk, portfolio manager Luz Padilla has 75% of the fund's assets in investment-grade securities, and the portfolio has an average credit quality of BBB. While some funds focus on government bonds, TCW owns a mix of government and corporate issues. A favorite issuer is Globo Comunicacao, a leading Brazilian broadcaster. "We should see positive economic growth in some emerging economies this year, and that will help investment-grade corporate bonds," says Padilla. For a broadly diversified fund, try the T. Rowe Price Emerging Markets Bond Fund ( PREMX), which has returned 12% annually for the past decade. Besides holding positions in Brazil and other larger economies, the fund owns stakes in frontier markets, such as Angola, Serbia and Gabon. Portfolio manager Michael Conelius says rising commodity prices are boosting bonds in many developing countries. He is particularly keen on the outlook for Ghana. "The nation's main exports of cocoa and gold have held up well throughout the global downturn, and recent oil discoveries should further bolster the economy," he says. In a contrarian move, Conelius owns bonds of Iraq. He says that the country has little debt and strong income from oil exports. He expects that increasing foreign investments will bolster Iraq's oil fields. That should help stabilize the country's bonds for years to come.