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does anyone invest in emerging market bonds/EM govt bonds or foreign REITs?

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  • does anyone invest in emerging market bonds/EM govt bonds or foreign REITs?

    Hello all,

     

    I was just wondering if anyone invests in emerging market bonds (or EM govt bonds), or foreign REITs?  Names of possible investments that are example of one of the three, through vanguard, include VWOB, VNQI, VEMBX.

    I searched for this but couldn't find many comments about it in the WCI forums.

    The reason I ask is because I have about 20% of my investments allocated to bonds (vwiux/vwlux), 20% allocated to international stocks, 10% to mainly domestic REITs via VNQ, and 50% to the total us market (VTI).  as my net worth grows, I am considering throwing a little international diversification to both my REIT and bond funds, for the sake of added protection in case something unfavorable happens to the US stock/bond/real estate or international stock market (I know 5% of each isn't going to do much but it's better than not diversifying further, I think!).

    Mainly, I am trying to figure out if there is something I am missing on why most people don't diversify into these funds; whether the extra hassle of more funds is not worth it, or whether the added insurance or having these funds is not worth the giving up the cost of losing more certain possible returns in the US stock market, etc.

  • #2
    The role of bonds is primarily to reduce risk and volatility in your portfolio. Emerging market bonds do not achieve this goal, but US treasuries do.

    I don't hold emerging market bonds. I do have a global REIT fund.

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    • #3
      no, no, yes (fido product)

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      • #4
        No they are not part of my plan.

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        • #5
          I hold VWOB (>5% of overall portfolio) and bought in shortly after Vanguard created it in 2013-ish if i remember correctly - I consider it as an equity holding mentally since it's [relatively] volatile and as a bit of diversification since otherwise I don't have any ex-US bonds.

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          • #6
            20% of my bond holding are in local currency EM bonds. 5% are in global REITs, along with another 5% in gold and global resource companies.

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            • #7
              I have a 10% REIT allocation with 5% in US (SCHH) and 5% in foreign (VNQI). My wife and I have an overarching philosophy that the US will experience some reversion to the mean over our lifetime, that is, the US did really well in the past ~70 years (post-WWII) relative to the world, but the rest of the world will catch up. As such our portfolio has a high global:US stock ratio, but not crazy:

              45% US stock (currently 51.2%)

              40% International stock (currently 20.1%)

              10% REIT (currently 12.3% US and 10.3% foreign)

              5% Other (currently 6.2%)

              Fixed amount of cash, home equity, and 529 are independent of asset allocation. I don't see a need to re-balance at the moment, I'm currently buying international to bring back to the preferred allocation.

               

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              • #8
                @neuro-doc.

                The role of bonds is primarily to reduce risk and volatility in your portfolio

                Agree, but also can generate income.   EM bonds currently yielding  5.5%.  It's all a tradeoff.

                 

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                • #9
                  Thank you all for your responses.  One final question: for those of you that do invest in foreign REITs and foreign bonds, do you invest these in your taxable account (brokerage account)?  if so, do you find that the tax consequences of doing so (I am not sure if I am fully aware of whether there are more consequences of these compared to domestic reits/bonds) is worth it for the extra diversification?

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