As developing nations continue to prosper and grow and investment dollars find their way overseas, international bond exchange traded funds [[ETFs]] may be the answer to portfolio diversification and risk minimization.As ETFs continue to grow in popularity, they can offer investors exposure to international debt with relative ease. The reasons behind gaining exposure to international debt include spreading out the sensitivity of U.S. interest rate movements and playing currencies exchange movements. Although there are numerous international bond funds to choose from, in general, it is a safer bet to use those of developed nations rather than those of emerging ones.
It is equally important to consider the risks involved in dealing with these international bond ETFs in particularly the increases in default risks that have prevailed in some European nations. For this reason, it is important to completely understand what one’s investment holds.
A few international bonds to consider are:
- iShares S&P/Citi Intl Treasury Bond (IGOV: 95.095 0.00 0.00%), which carries an expense ratio of 0.35% . IGOV holds 44 different bonds with an average duration of 5.8 years and gives bond exposure to markets like Japan, the United Kingdom, France and Germany.
- iShares S&P/Citi 1-3 Yr Intl Treasury Bd (ISHG: 95.35 0.00 0.00%), which carries an expense ratio of0.35 %. ISHG holds 26 bonds with an average duration of 1.67 years and gives exposure to markets like Japan, Belgium, Spain and Finland.
- SPDR Barclays Capital Intl Treasury Bond (BWX: 53.79 0.00 0.00%), which carries an expense ratio of 0.35%. BWX holds 82 different international bonds, is primarily focused on Japan, Germany and Italy and has an average duration of 6.1 years.
To further protect against risks that these bonds carry, the use of an exit strategy which identifies specific price points at which these ETFs could witness downward price pressure is of importance. 
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