I normally dismiss foreign bonds and bond funds, whether denominated in U.S. dollars or in native currencies. Looking back five years through March 3, which allows for events besides the COVID lockdowns and war in Ukraine, the broad Standard & Poor's international aggregate investment-grade index (covering developed markets) lost an annualized 2.2%, in U.S. dollars. Even counting 2022's catastrophe, S&P's U.S. aggregate bond index posted a 0.6% annual return – almost a three-point yearly advantage for staying home.
Sector and single-country comparisons do not change the narrative. Australia has a powerful export and commodity economy and relatively high bond yields – yet its corporate bonds are also 2% a year in the red since 2018, in U.S. terms.
