Skip to Content
Fund Spy

For World-Bond Funds, Currencies Are No Sideshow

Three approaches to currency management drive different risk/reward profiles.

Mentioned: , ,

Solid long-term performance and diversification from U.S. bond and equity markets have made the world-bond fund category one of the fastest-growing categories that Morningstar tracks. Because of the wide variety of approaches (unhedged versus U.S.-dollar-hedged, global versus non-U.S., broad-based versus single-sector), funds within the Morningstar Category have a large range of risk exposures. 

It makes most sense to divvy up the category by various approaches to currency management rather than by credit, regional, or sector focus, as currency movements have the most significant impact on risk/return profiles. World-bond funds tend to follow one of three currency-management approaches: unhedged, tactically hedged, and U.S.-dollar-hedged. (In this article, tactically hedged funds will be referred to as "tactical" and U.S.-dollar-hedged funds as "hedged.")

Karin Anderson has a position in the following securities mentioned above: TPINX. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.