In today's interconnected financial world, savvy investors are looking beyond their borders to secure their wealth and achieve long-term stability. International fixed income investments offer a compelling avenue for diversification, allowing you to tap into global opportunities that domestic markets alone cannot provide.

By venturing into debt securities from developed economies like the United States and Europe, you can build a resilient portfolio that withstands local economic fluctuations. Protecting against domestic volatility becomes more manageable with a strategic approach to global bonds and Treasuries.

This article delves into the essentials of international fixed income, highlighting its advantages, key opportunities, and practical strategies for Brazilian investors. Unlock new levels of financial security by exploring these markets with confidence and insight.

What is International Fixed Income?

International fixed income refers to investments in debt securities issued by foreign governments or corporations outside of Brazil.

These instruments, such as bonds and Treasuries, are predominantly found in developed markets like the US and Europe.

They provide exposure to strong currencies like the US dollar, enhancing portfolio stability.

• Common instruments include government bonds from the US Treasury.
• Corporate bonds from stable companies in Europe.
• Securities traded in major global financial centers.

This investment class allows you to benefit from global economic trends while mitigating risks tied to Brazil's economy.

Advantages of Investing in Global Fixed Income

The primary benefits include low risk and competitive returns adjusted for risk.

Investing globally decouples your portfolio from Brazilian assets like local interest rates or the stock market.

Exposure to strong currencies like the dollar provides a hedge against currency devaluation.

• Low risk profile with stable and predictable income streams.
• Decorrelation with Brazilian assets enhances overall portfolio stability.
• Safe haven during global crises, offering protection in turbulent times.
• Recurring income from interest payments with high reliability.
• Geographic diversification reduces concentration risk in any single market.

These advantages make international fixed income a cornerstone for conservative and moderate investors.

Economic Outlook for 2026: Global and Brazilian Perspectives

The global economy in 2026 is poised for shifts, with expected interest rate cuts in the US and other developed nations.

In Brazil, the Selic rate is projected to drop from 15% to around 12%, while inflation stabilizes near 4.16%.

The US Federal Reserve may maintain rates between 5.25% and 5.50%, with cuts on the horizon to preserve confidence.

These projections highlight the changing dynamics that make international investments particularly attractive.

Key Opportunities in Global Markets

Specific opportunities include US Treasuries with yields above 4.5%, a rare occurrence that offers locking in favorable rates.

Quality bonds from developed markets provide steady income as interest rates shift towards predictability.

• US Treasuries: Prefixados bonds with safe haven status and potential for mark-to-market gains during rate cuts.
• Global bonds: Focus on sectors like banking, utilities, and energy for recurring income.
• ETFs and funds: Diversified exposure to international markets through instruments like BDR BTLT39.
• Emerging markets: Such as India, for growth potential in a diversified portfolio.
• European markets: Attractive valuations in areas like defense and energy transition.

Global pension funds allocate about 36% of their assets internationally, underscoring the importance of this strategy.

Strategies for Allocation and Diversification

Experts recommend allocating a portion of your portfolio to international assets, such as 15% for foreign exposure.

Within that, a balanced mix of public and corporate bonds can optimize risk and return.

Combining with other asset classes like global stocks and gold enhances diversification.

• Recommended allocation: 15% in foreign assets, with 52.5% in fixed income (42.5% public, 10% corporate).
• Use global ETFs or actively managed funds for easy access and broad diversification.
• Incorporate assets from emerging markets to balance risk and opportunity.
• Consult with financial advisors to tailor strategies based on individual risk profiles.
• Monitor costs such as brokerage fees and international transfer charges to maximize returns.

This approach helps in building a resilient portfolio that adapts to various economic scenarios.

Risks to Consider

While beneficial, international fixed income comes with risks such as currency volatility and market fluctuations.

Long-term bonds can be subject to mark-to-market risks if interest rates change unexpectedly.

Understanding investor risk profiles is crucial to avoid mismatches with investment characteristics.

• Currency volatility: Fluctuations in exchange rates can impact returns, especially with the Brazilian real.
• Mark-to-market risks: For bonds with long maturities, price changes can affect portfolio value.
• Costs: Including brokerage fees, remittance charges, and management expenses.
• Restrictions: Some instruments, like BTLT39, are only available to qualified investors.
• Global economic shifts: Changes in policies or crises can affect bond prices and yields.

Being aware of these risks allows for better planning and implementation of mitigation strategies.

How Brazilians Can Access These Investments

Accessibility is facilitated through various instruments such as ETFs, BDRs, and international accounts.

For example, BDR BTLT39 represents US Treasuries and is traded on B3, though it is restricted to qualified investors.

Low correlation with Brazilian assets helps in hedging against local risks like political instability.

• ETFs: Global fixed income ETFs available through platforms like XP or Avenue.
• BDRs: Brazilian Depositary Receipts for foreign securities, offering local trading access.
• Active managed funds: Offered by financial institutions with expertise in global markets.
• International accounts: Direct investment via brokers like Nomad for broader access.
• Portfolio management services: Tailored solutions from advisors to simplify the process.

These options make it easier for Brazilian investors to incorporate global assets and enhance their financial security.

Comparison with Brazilian Fixed Income

Brazilian fixed income remains attractive with real returns of 5-7% in instruments like CDBs and Treasury IPCA+.

Simulations show that for R$1,000 invested for one year, options like CDB 104% CDI yield R$1,118.23.

However, diversifying internationally is essential for added protection and exposure to global growth trends.

Balancing domestic and international investments maximizes returns while minimizing overall portfolio risk.

By leveraging both, investors can achieve a robust financial strategy that adapts to changing economic conditions.