International Bond ETFs Could Outperform U.S. Treasuries | Page 2 of 2 | ETF Trends

However, an appreciating U.S. dollar could weigh on these international bond ETFs since the funds do not hedge currency risks.

Alternatively, the Vanguard Total International Bond ETF (NYSEArca: BNDX) provides broad exposure to international debt, including foreign investment-grade government, corporate and securitized debt while hedging currency exposure, which can diminish volatility attributed to the Forex risks. BNDX includes a 56.9% tilt toward European countries.

Moreover, the recently launched iShares Core International Aggregate Bond ETF (NYSEArca: IAGG), which tracks a group of investment-grade international bonds, also hedge against fluctuations between the value of component currencies and the U.S. dollar. IAGG includes a 61.6% weight toward European debt.

For more information on the fixed-income market, visit our bond ETFs category.

Max Chen contributed to this article.