TY - JOUR T1 - Benefits of International Bond Diversification JF - The Journal of Fixed Income SP - 57 LP - 72 DO - 10.3905/jfi.2004.391028 VL - 13 IS - 4 AU - Delroy M. Hunter AU - David P. Simon Y1 - 2004/03/31 UR - https://pm-research.com/content/13/4/57.abstract N2 - Despite suggestions that diversification benefits have fallen in the recent decade, currency-hedged bonds provided U.S. investors significant diversification benefits over January 1992-September 2002. U.S. bond returns have become increasingly correlated with U.K. and German bond returns, but correlations have declined with Japanese bonds. The changing correlations are consistent with more synchronized business cycles, but correlations have not become high enough to threaten the gains from diversification. Nor are gains on a currency-hedged basis diminished during periods of weakness or increased volatility in U.S. or foreign bond markets. Risk-reward trade-offs for each bond market vary in a predictable manner, which underscores the potential benefits of international bond investing. ER -