International Income
  • International income funds invest in governments both foreign and domestic
  • Mutual funds which specialize in international income offer higher risks and higher returns than some other investment options
  • Choosing no load international income funds will prevent you from paying high load fees, which are simply sales commissions to the broker

Why are international income funds so popular with a large number of investors? There are several reasons for this popularity, and these same reasons may cause other investors to stay away. The goal of international income mutual funds is to provide income and capital preservation, normally through a wide variety of diverse bond investments. International mutual funds invest in bonds from foreign governments, and this does involve more risk generally than funds which only invest in bonds secured by the US government. Government bonds can be safe or risky, depending on the government. Right now an investment in US government income funds is a smart decision because the risk level is extremely low. Investing in bonds and securities from the government of Afghanistan or Somalia right now would be considered a very high risk investment, because there is a good chance that these foreign governments may default on the payment due to economic and political instability, as well as foreign currency fluctuations. An international income mutual fund investment may be safer than other types of international investments, but they may still carry significant and high levels of risk.

Choosing no load international income funds makes good financial sense. No load funds do not charge any front or back end load fees, so your investment capital earns more thanks to no deductions. Load fees are basically sales commissions paid to a broker or financial advisor for quality investment advice concerning where to put your investment capital for the best results. In theory this sounds like a good idea, getting professional investment advice seems like a wise move. The problem is that you can not be assured that choosing loaded funds will give you access to high quality investment information. Some brokers and advisors receive a commission from the mutual funds that they direct clients to. This means that load funds may offer you access to investment advice that works great for the broker or advisor who directed you to these funds, but may not be the best investment option for your goals and acceptable risk levels. Load funds can charge fees that may be as high as eight percent or more, and this can add up to a big part of your investment capital. International income mutual funds do have some risks involved, so ding all of the necessary research is important, especially if you choose no load funds. If you want investment advice, pay for it by the hour. This method is much cheaper and does not involve any conflicts between your financial and investment interests and those of the person who is advising you on where to place your investment capital.

The international income investment market has really opened up in the last few years, allowing for terrific investing opportunities. Because international income funds invest in foreign governments, there may be higher levels of volatility and wide market swings. These funds attempt to minimize the risks involved to the investment capital, but it is possible to see large losses at times with some of these funds. Unlike mutual funds which only invest in US government securities, international income mutual funds can invest in governments around the globe. This means higher returns because the risk level is higher as well. These funds try to balance preserving the investment capital of fund holders and getting better returns for these investors by taking higher risks. It is a good idea to stay away from these funds if your investment strategy does not include this level of risk, but for many investors these funds are the best fit with their investment goals and plans. Choosing no load funds will help give you a better return on your investment because there are no large load fees deducted from your investment.