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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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