FYI: Some international bond funds, including Vanguard Total International Bond Index Fund, use a traditional hedging strategy to help minimize the risk caused by fluctuations in the value of foreign currencies versus the U.S. dollar. The strategy allows the fund's total return—income plus any principal change—to remain undistorted, for the most part, by changes in the value of foreign currencies against the U.S. dollar.
Regards,
Ted
https://personal.vanguard.com/us/insights/video/int-hedging2014
Comments
Shame, shame! I linked this last July (http://www.mutualfundobserver.com/discuss/discussion/comment/43546/#Comment_43546) and maybe another time before that!
(In all seriousness, an excellent video and well worth the watch. The whitepaper is also worth reading. Think Professor Snowball linked it in his DODLX review.)