The global consequences of politics and economics have never been more in focus. As I spoke recently by telephone with Terence Prideaux, London-based manager of Kemper Global Income Fund, he told me he was staring at three computer screens, each featuring a separate story about the Persian Gulf crisis.
"Our fund has to keep track of world events and how they affect a great many countries, currencies and bond markets," said Prideaux, who believes the U.S. dollar will remain weak in 1991 because of ongoing recession and low interest rates.
International bond funds have been booming, with high yields and the opportunity to expand beyond U.S. markets the primary reasons. Last year, that group logged an average total return of 12.13 percent.
"With the junk bond market gone and domestic rates low, a lot of investors are chasing yields and international bond funds look good," said Don Phillips, editor of the Mutual Fund Values advisory service.
Kemper Global Income Fund, up 22.66 percent last year, benefited from strong foreign currency values vs. the sagging dollar. The pound sterling gained 20 percent against the greenback, while the mark and franc rose 14 percent.
Strategy separates fund choices.
"Our fund was 70 percent in bonds of European countries at the beginning of the year, moving to 35 percent Japanese at midyear," said F. Mark Turner, managing director in charge of Scudder International Bond Fund, up 21.11 percent as it specialized in bonds with maturities close to 10 years.
In another game plan, shorter-term maturities ranging from 30 days to one year are the emphasis of two International Cash funds, ranking third and fourth among all bond funds.
The top-performing taxable bond funds in total return (interest yield plus price appreciation) in 1990, according to Mutual Fund Values Inc., were:
Kemper Global Income Fund, Chicago, $52 million in assets, 4.5 percent maximum "load" (initial sales charge), $1,000 minimum initial investment, up 22.66 percent.
Scudder International Bond Fund, Boston, $196 million assets, no load, $1,000 minimum, up 21.11 percent.
International Cash: Hard Currency, Pasadena, Calif., $37 million assets, 2.25 percent maximum load, $2,500 minimum, up 20.19 percent.
International Cash: High Income Currency, Pasadena, Calif., $48 million assets, 2.25 percent maximum load, $2,500 minimum, up 18.50 percent.
MFS (Massachusetts Financial Services) World Wide Governments Fund, Boston, $146 million assets, 4.75 percent load, $1,000 minimum, up 17.90 percent.
Paine Webber Master Global Income Fund, New York, $1.4 billion assets, no load (but back-end fees ranging from 5 percent the first year to 2 percent in the fourth year), $1,000 minimum, up 17.67 percent.
Van Eck World Income Fund, New York, $62 million assets, 8.5 percent maximum load, $1,000 minimum, up 16.75 percent.
Dean Witter Worldwide Income Fund, New York, $456 million assets, no load, $5,000 minimum, up 16.62 percent.
Putnam Global Government Income Fund, Boston, $248 million assets, 4.75 percent load, $500 minimum, up 16.33 percent.
T. Rowe Price International Bond Fund, Baltimore, $428 million assets, no load, $2,500 minimum, up 16.05 percent.