Bonds Without Borders

Funds holding issues from developing nations outpaced their stodgy cousins from the industrialized world

category. “I like the way these funds spread the risk among different countries and different types of issuers,” she says. “The managers have experience in this asset class, too.”

Emerging markets bond funds have enjoyed six straight years of double-digit gains, from 1999 to 2004. But before the streak began, the category lost 22% in 1998, so there may be down years in the future. “After an extended rally,” says Dutta, “investors should be doubly cautious.”

Nevertheless, worldwide economic growth seems to be continuing, and developing countries rich in natural resources are benefiting from higher commodity prices. Long-term investors interested in diversifying their bond portfolios should consider emerging markets.
TOP EMERGING MARKETS BOND FUNDS RANKED BY 3-YEAR RETURN

Name Ticker 1-Yr. Total Return* 3-Yr. Annualized Total Return* 5-Yr. Annualized Total Return* Minimum Initial Purchase Phone Number Expense Ratio
AllianceBernstein Emerging Mkt Debt A AGDAX 19.83 22.95 16.16 $2,500 800-227-4618 1.21
PIMCO Emerging Markets Bond A PAEMX 21.76 20.50 18.95 $5,000 888-877-4626 1.25
TCW Galileo Emerging Markets Income I TGEIX 19.85 20.14 15.83 $2,000 800-386-3829 1.20
MFS Emerging Markets Debt A MEDAX 24.40 19.85 17.81 $1,000 800-225-2606 1.41
T. Rowe Price Emerging Markets Bond PREMX 25.83 19.69 14.98 $2,500 800-638-5660 1.08
Fidelity New Markets Income FNMIX 21.74 19.67 14.41 $2,500 800-343-3548 0.94
MainStay Global High Income A MGHAX 21.98 19.36 15.09 $1,000 800-624-6782 1.53
Fidelity Advisor Emerg Mkts Inc T FAEMX 21.77 19.11 13.86 $2,500 877-208-0098 1.44

Source: Morningstar Inc.
Morningstar makes every effort to ensure the completeness and accuracy of this data but cannot guarantee it.
*Returns through June 30, 2005, DISTINCT SHARE CLASS, RETAIL ONLY

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