The Opportunity in Global Bonds
You may be limiting your potential sources of return by investing in a single country. Conversely, by investing in global bonds, you can potentially reduce risk and improve returns by gaining exposure to countries with attractive economic and interest rate cycles. This creates the potential to provide a high level current income and preserve capital, increase diversification and reduce the overall volatility relative to purely domestic bond portfolios.
Why Global Fixed Income Now?
Current conditions in the credit markets have global investment grade bonds trading at potentially attractive levels. Market factors to consider:
- Recent selling pressure in the credit markets has created what many consider attractive yield levels and spreads.
- Regardless of the length of the current economic weakness, investors with a multi-year horizon may potentially benefit from a portfolio of global investment grade bonds.
- Global investment grade bonds with shorter maturities may help reduce interest rate risk for investors as well as add diversification benefits.
- A country’s bond market may produce average performance in local currency terms within a given year, but a relatively cheap and appreciating currency can provide you with an additional source of return. Investing in the various countries, coupled with currency appreciation or hedging, may offer greater return potential than that of any one domestic market.
Global Bond Income Trust
Take advantage of a portfolio of taxable bonds through a convenient and efficient way of purchasing a professionally selected and diversified portfolio of investment grade bonds.
Why consider the Global Bond Income Trust?
Current conditions in the credit markets illustrate the critical need for in-depth research in selecting fixed income securities. Invesco’s credit research and securities selection capabilities coupled with our history, experience and market-leadership in fixed income unit trusts provides investors with a unique investment opportunity: Global Bond Income Trust.
- A defined and diversified portfolio of investment grade sovereign and corporate bonds1
- Low minimum investment of approximately $1,000
- May be a suitable for tax sheltered vehicles like IRAs
- Yields may be higher than U.S. treasury bonds with comparable maturities2
- Provides diversification of taxable bonds
- Consists of approximately 10 currencies which may provide a potential hedge against further U.S. dollar weakness
Portfolio Selection Process
- A Standard & Poor’s rating of at least “BBB-”, a Moody’s Investors Service Inc., rating of at least “Baa3” or, if not rated, the bonds had credit characteristics sufficiently similar to those of comparable bonds that were so rated as to be acceptable for acquisition by the Trust in the opinion of the Sponsor;3
- The prices and liquidity of the bonds relative to other bonds of comparable quality and maturity;
- The current income provided by the bonds;
- The diversification of bonds as to purpose of issue and location of issuer; and
- The probability of early return of principal or high legal or event risk
Diversification does not guarantee a profit or eliminate the risk of loss.
There is no assurance that a unit investment trust will achieve its investment objective. An investment in this unit trust is subject to market risk, which is the possibility that the market values of securities owned by the trust will decline and that the value of trust units may therefore be less than what you paid for them. This trust is unmanaged and its portfolio is not intended to change during the trust’s life except in limited circumstances. Accordingly, you can lose money investing in this trust.
Changes in the exchange rates of the foreign currencies of the bonds relative to the U.S. dollar will affect the value of the Trust’s income and assets. These changes could be material and will affect the amount of your interest distributions. Changes in relative currency exchange rates and exchange control restrictions will also affect the amount of bonds required to be liquidated to meet redemption requirements and to pay Trust expenses, as well as the value of the bonds at their respective maturities and at termination of the Trust.
The financial markets, including those for corporate and sovereign bonds, have recently experienced periods of extreme illiquidity and volatility. Due to these significant difficulties in the financial markets, there can be substantial uncertainty in assessing the value of an issuer’s assets or the extent of its obligations. For these or other reasons, the ratings of the bonds in the Trust’s portfolio may not accurately reflect the current financial condition or prospects of the issuer of the bond.
An investment in a trust should be made with the understanding of the risks associated therewith, such as the inability of the issuer or an insurer to pay the principal of or interest on a bond when due, volatile interest rates, early call provisions and changes to the tax status of the bonds.
Investments in a trust may be subject to interest rate risk. If interest rates rise, the value of the bonds in a trust may decline and if interest rates decline the value of the bonds may increase. Also, the longer the period to maturity, the greater the sensitivity to interest rate changes tends to be.
Securities of foreign issuers in the Trust present risks beyond those of U.S. issuers. These risks may include market and political factors related to the company’s foreign market, international trade conditions, less regulation, smaller or less liquid markets, increased volatility, differing accounting and tax practices and changes in the value of foreign currencies which may have both economic and tax consequences.
