When assembling a bond portfolio, many U.S. investors choose to stay local, investing primarily in U.S. bonds. We believe that, by adding international bonds to the mix, investors may increase the potential for portfolio diversification, yields and risk-adjusted returns.
The world is made up of countries at different stages of the business cycle, and bond returns among countries fluctuate as a result. International bond portfolio managers have the flexibility to seek attractive opportunities created by different central bank policies, inflation trends and economic fundamentals. Managing currency exposures may also offer another avenue to help increase returns.
Worth noting, the bond markets of other countries have historically outperformed the United States. By expanding the opportunity set to include a wide array of countries and factors, bond investors may seek to increase their long-term portfolio outcomes.
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The mention of specific countries, securities or sectors does not constitute a recommendation on behalf of any fund or OppenheimerFunds, Inc.
Fixed income investing entails credit and interest rate risks. Interest rate risk is the risk that rising interest rates or an expectation of rising interest rates in the near future, will cause the values of the Fund’s investments to decline. Risks associated with rising interest rates are heightened given that rates in the U.S. are at or near historic lows. When interest rates rise, bond prices generally fall, and the Fund’s share prices can fall. Below-investment-grade (“high yield” or “junk”) bonds are more at risk of default and are subject to liquidity risk. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. Emerging and developing market investments may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues. Derivative instruments entail higher volatility and risk of loss compared to traditional stock or bond investments. Currency derivative investments may be volatile and involve significant risks. Small and mid-sized company stock is typically more volatile than that of larger company stock. It may take a substantial period of time to realize a gain on an investment in a small-sized or mid-sized company, if any gain is realized at all. The Fund is classified as a “non-diversified” fund and may invest a greater portion of its assets in the securities of a single issuer. Regulation S securities are privately offered securities, may be illiquid, and involve a high degree of risk which may result in substantial losses to the Fund. The Fund may also invest through a wholly-owned Cayman Islands subsidiary, which involves the risk that changes to the laws of the Cayman Islands could negatively affect the Fund.
Mutual funds and exchange traded funds are subject to market risk and volatility. Shares may gain or lose value. Diversification does not guarantee profit or protect against loss.
These views represent the opinions of the Portfolio Managers at OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.