Many U.S. investors tend to have a home bias, forgoing exposure to international investments. International bond ETFs help investors diversify and gain access to a range of different global fixed-income assets. IGOV tracks bonds denominated in local currencies issued by foreign governments in developed markets outside the U.S. The ETF’s effective duration is almost 7.7 years.
“That’s a lot of duration risk for no income. The potential upside is uninspiring, but the possible downside is breathtaking. It won’t take much to cause some pretty big losses for these bondholders, who can no longer count on receiving regular interest payments, because there are none,” according to Bloomberg.
With a 30-day SEC yield of 0.4%, that means IGOV’s annual expense ratio of 0.43% is higher than the ETF’s most recent 30-day SEC yield.
iShares International Treasury Bond ETF
