Weird Bond ETF Picks: PowerShares International Corporate Bond ETF (PICB)
Bond ETF Yield: 2.74%
If the average investor is woefully under-allocated to international stocks, then he or she is tragically under-allocated to international bonds. That’s a real shame, as international bonds can actually be a great way to fight rising interest rates.
The key is that interest rates in various nations are completely different from each other. What’s going on in Singapore is very different than what Canada is doing. The fact that international rates are not perfectly correlated with each other and don’t rise at similar paces can actually provide a smoother ride for investors here in the U.S.
The PowerShares International Corporate Bond ETF (PICB) tracks investment grade corporate bonds from several developed market nations. Its portfolio includes bonds from heavy hitters such as the Royal Bank of Canada (RY) and BHP Billiton (BHP).
The key is that PICB has zero exposure to the U.S. dollar and the rising interest rates that affect our bonds. As a corporate bond ETF, investors get a slightly better yield (currently 2.74%) than a basket of international sovereign/treasury bonds.
Expenses for this bond ETF run at a cheap 0.50%.