Alliance Bernstein Global Bond (ANAGX). This fund evenly splits its investments between U.S. and non-U.S. bonds and includes a hefty weighting of government bonds. More than 40 percent of the fund's holdings are high-quality, AAA-rated bonds. Year to date, the fund is up 24 percent, and it has returned an annualized 8 percent since its inception in 1992. It takes on slightly more duration risk (a measure of interest rate sensitivity) than its peers. Bonds with longer durations are more susceptible to interest rate risk, but they also have the potential to pay a higher yield. The fund's top 10 largest holdings include one French government bond that doesn't expire until 2032, for example. The fund levies the cheapest annual fees of these four funds, 0.90 percent.
Year to date, this fund has returned an astounding 41 percent, and it has gained an annualized 8 percent since its 1987 inception. It can be difficult sometimes to tell exactly what the fund holds because management uses hedging strategies. As of the end of November, the fund had more than 80 percent of its assets in U.S. securities. More than half of the fund's assets are AAA-rated, the highest credit rating assigned to securities? The fund yields almost 6 percent, which is almost double the average yield of its peers. It charges 1.13 percent in annual fees.
Of the four funds listed, this one has the most international exposure. About 70 percent of Templeton Global Bond's assets are invested in foreign government bonds, and emerging markets play a large role in the portfolio. "Since 2001, it's been in the top half of its peer group in every calendar year, and it looks like it's going to finish that way again in 2009, so the strategy has been working," Rosenblatt says. "Investors just have to be comfortable with a greater emerging markets exposure, which of course could add some volatility to the fund." Year to date, the fund has returned 18 percent, and it has returned 8 percent since its inception in 1986.