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Tickers in this Article: FEMDX, GMDFX, PEBLX, GMHBX, PLMAX
For the average investor, high yield mutual funds are the best method to invest in bonds rated below investment grade, popularly known as junk bonds. This is because these funds hold a wide range of such securities, significantly reducing portfolio risk. In addition, these funds provide better returns than investments with higher ratings, including government and corporate bonds. Further, because the yield from such bonds is higher than investment grade securities, these investments are less susceptible to interest rate fluctuations.

Below we will share with you the 5 highest yielding Zacks #1 ranked international bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all international bond funds, investors can click here to see the complete list of funds.

Mutual Fund

Sec 30 Day Yield

Franklin Templeton Emerging Market Debt Opportunities

5.35%

GMO Emerging Country Debt IV

5.11%

PIMCO Emerging Local Bond A

2.7%

GMO Currency Hedged International Bond III

1.24%

PIMCO Developing Local Markets

0.55%

Franklin Templeton Emerging Market Debt Opportunities (FEMDX) seeks appreciably high total return. The fund invests the majority of its assets in emerging market debt securities. It may invest substantially all of its assets in debt securities rated below investment grade. The international bond mutual fund returned 14.28% in the last one year period.

The international bond mutual fund has an expense ratio of 1.00% compared to a category average of 1.25%.

GMO Emerging Country Debt IV (GMDFX) invests in order to attain returns higher than its benchmark the J.P. Morgan EMBI Global index. To achieve these returns, the fund invests in sovereign and quasi sovereign debt instruments issued by emerging countries. The international bond mutual fund returned 19.68% in the last one year period.

As of February 2013, this international bond mutual fund held 167 issues, with 5.53% of its total assets invested in Bolivarian Republic Venezuela 11.95%.

PIMCO Emerging Local Bond A (PEBLX) invests a large proportion of its assets in fixed income securities denominated in currencies of emerging markets. The fund may purchase both investment grade securities and junk bonds. However, not more than 15% of its assets may be invested in securities with ratings below ‘B’. The international bond mutual fund returned 16.72% in the last one year period.

The Fund Manager is Michael A. Gomez and he has managed this international bond mutual fund since 2006.

GMO Currency Hedged International Bond III (GMHBX) invests a large proportion of its assets in bonds. The fund focuses on attaining returns higher than the J.P. Morgan Non-U.S. Government Bond (Hedged) (ex-Japan) Index. The international bond mutual fund has returned 9.81% in the last one year period.

The international bond mutual fund has an expense ratio of 0.39% compared to a category average of 1.10%.

PIMCO Developing Local Markets (PLMAX) seeks total return. A majority of its assets is invested in fixed income instruments including those issued from emerging markets. The international bond mutual fund returned 10.24% in the last one year period.

The Fund Manager is Michael A. Gomez and he has managed this international bond mutual fund since 2005.

To view the Zacks Rank and past performance of all international bond mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.

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