Global Bond Funds

Global bond funds are mutual funds that invest by buying domestic and foreign bonds. Similar to global equity funds, the returns are based on a foreign country's economy and the strength of its currency, as well as the strength of the U.S. economy and its currency. The returns from these types of funds vary depending on all of these factors.

While the risk of investing in global bond funds is not quite as high as it is for investing in global equity funds, investing in global bond funds still involves quite a bit of risk. Predicting the ups and downs of our own economy is difficult enough, but it's even more difficult to do with foreign countries.

Your level of involvement in these types of investment vehicles should be carefully based upon the age and stage of your life. At a certain point, investments in global bond funds may just be too risky even at the lowest levels. Based on this assessment, you may want to stick with bond funds of the less risky variety to diversify your portfolio.