The weak dollar, a scenario that could soon be extended with the help of interest rate cuts by the Federal Reserve, is lifting a plethora of asset classes. This includes commodities and international equities. Investors shouldn’t take their eyes off the positive effects accruing to ex-U.S. bonds.
That includes corporate debt — bonds accessible in broad-based fashion via ETFs such as the Invesco International Corporate Bond ETF (PICB). The $190 million fund may not get much fanfare among bond ETFs. But the fund turned 15 years old in June. That confirms it is battle-tested across a variety of market-setting and interest-rate climates.
PICB follows the S&P International Corporate Bond Index. The ETF be a credible consideration for fixed income investors. That’s because the ETF provides exposure to investment-grade corporate bonds denominated in all of the G10 currencies excluding the dollar. Said another way, PICB provides leverage to the declining greenback with the benefit of a decent 3.37% 30-day SEC yield.
PICB Could Be Powerful
To its credit, PICB has already excelled in 2025. It’s gained nearly 9% YTD, while some basic international bond indexes have disappointed despite the weaker dollar.
“The price return of the Bloomberg Global Aggregate ex-USD Index is negative so far this year compared to a positive price return for the Bloomberg US Aggregate Index, and its income return was a bit lower, as well,” noted Collin Martin of Charles Schwab.
A quick glance at PICB’s currency exposures confirms the ETF’s potential advantages in a weak dollar environment. Half of the Invesco fund’s 590 holdings are denominated in euros. And another 43.76% are issued in British pounds or Canadian dollars. That roster could set PICB investors up for success should the greenback continue faltering.
“We expect the dollar weakness to continue, with the Federal Reserve expected to begin cutting rates again later this fall,” added Martin. “Interest rate differentials tend to be a key driver of currency values because capital tends to flow to areas with higher yields, so the dollar could decline if the yield advantage that U.S. bond investments currently offer above international bond investments declines.”
PICB offers other perks. Its aforementioned 30-day SEC yield isn’t exceedingly high. Yet it’s above the paltry yields found on some broader international bond benchmarks. Additionally, the ETF’s modified duration is 5.49 years. That puts it in intermediate-term territory, a category of the bond world that often sports lower correlations to equities.
PICB could also be enticing for conservative investors due to its high-quality roster. Forty-nine percent of the ETF’s holdings are rated by S&P as AAA, AA, or A.
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