What are the categories within foreign bonds?

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David John Marotta
President, Marotta Wealth Management, Inc., Marotta Wealth Management, Inc.
http://www.emarotta.com  
434-244-0000

David John Marotta is the President of Marotta Wealth Management, a fee-only financial planning and asset management firm in Charlottesville, Virginia. He is an oft-quoted writer and speaker on financial matters and his weekly financial column can be found at www.eMarotta.com

What are the categories within foreign bonds?

 

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Host: What are the categories within foreign bonds?

David Marotta: The categories within foreign bonds, first is what's called sovereign debt, where you are loaning money to another country and that country, just like we have treasury bills, other countries have bond investments, that are very high quality and they are backed by the full faith of that country, and within the developed world sovereign debt is fairly stable. You also have foreign corporate debt and foreign corporate debt is when you are loaning money to a foreign company and that will generally pay a higher rate of return than the United States but not always. So, that is an another category. And then you have debt in the emerging markets. Emerging markets are emerging market countries. They used to be called the Third World Countries, they used to be called the Developing Nations, they used to be called the Non-Aligned Nations. So, countries that are not developed countries, things like India, China, Russia, Brazil and they are growing in their economies, they have a great need of capital investments there and make a good return and so you have emerging market bonds which generally pay an even higher rate of return.

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