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.