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23 Jan 2026
Beyond borders: Unlocking international investment through bond ETFs
In today’s economic climate, investors want to grow their wealth without taking on excessive risk. Exchange-traded funds (ETFs) can help achieve this by offering diversification through a single investment. ETFs are funds that track a basket of assets and trade on exchanges, much like individual stocks. Broadly, there are two types: stock ETFs, which track stocks to capture capital appreciation, and bond ETFs, which track bonds to preserve capital.1
For investors seeking international exposure with diversification, bond ETFs provide a practical way to access global fixed-income markets and aim for more stable returns compared to equities.
What are bond ETFs?
A bond ETF is a fund traded on an exchange that holds fixed-income securities such as government or corporate bonds. Instead of lending money to a single borrower or purchasing individual bonds, investors gain exposure to a pool of bonds through a single trade.
Some bond ETFs may yield higher returns by focusing on companies and governments with higher interest rates and more favourable credit ratings. The structure of a bond ETF spreads exposure across multiple borrowers,2 reducing the impact of any one of them defaulting and ensuring returns that mature at different times. Many bond ETFs also pay regular interest, providing a steady cash flow.
Why should I add international exposure to my fixed-income investments?
Domestic bond markets can be small, which could limit your portfolio’s growth potential. For instance, the stock market in Singapore is projected to reach US$888.14 billion3 in 2025, less than one percent of the global market capitalisation projection of US$128.07 trillion.4 By comparison, the United States is forecast at US$54.88 trillion.5
You can opt to go beyond the domestic bond market and unlock deeper and more liquid credit markets in the United States, Europe and emerging economies. The global exposure offers diversification, reducing your reliance on a single economy and providing entry into sectors not represented locally.
What are the benefits of a bond ETF?
A key benefit of bond ETFs is that they are a cost-effective solution for gaining international exposure to your investment portfolio. By investing in a single ETF, you gain access to a diversified pool of government and corporate bonds.
Individual bonds often require large minimum commitments, but bond ETFs remove this barrier by requiring smaller entry amounts. They reduce transaction costs by pooling securities within one structure and usually carry lower management fees than actively managed bond funds.6
Another benefit is liquidity. Since bond ETFs trade throughout the day on exchanges, you can buy or sell quickly at transparent prices. This feature is particularly valuable and convenient when you need to adjust investment capital allocations in response to shifting market conditions.
Bond ETFs also have a lower risk profile than stock ETFs or individual stocks. As fixed-income securities, bonds come with a fixed interest rate and maturity date and thus present less uncertainty than stocks. Through a bond ETF, you get regular payments of interest or a steady cash flow from different bonds. This offers stability of returns without increasing your risk profile, allowing you to capture more income streams while reducing the impact of defaults.
What risks should I consider in bond ETFs?
Credit risk is one key consideration. A downgrade in a bond issuer’s rating, or a potential default, can lead to losses within the bond ETF. Current depreciation may also erode the value of the underlying bonds if they are denominated in foreign currencies.7
Interest rate risk,8 regulatory risk and tax considerations9 add another layer when governments and central banks introduce policy changes or new fiscal measures. As interest rates rise, bond price falls. Shifts in government and regulatory policy can also impact bond value or restrict cross-border investments.10 Choosing a bond ETF that invests across different countries and sectors can help spread these risks and reduce the impact of any single economy.
Liquidity can also tighten during periods of stress, affecting short-term pricing. Investors manage these risks by building a portfolio that joins ETFs with other assets such as mutual funds or real estate investing.
How do I access bond ETFs?
You can access ETFs,11 including bond ETFs, in several ways:
- Direct trading: Buy and sell through trading platforms.
- Managed portfolios: Use best-in-class digital tools that curate investment strategies matched to your risk profile and managed by experts.
- Diversified funds: Invest through fund structures that already include bond ETFs, giving you professional oversight as part of a broader allocation.
Venturing into the international investment space calls for expert navigation. At DBS Treasures, we provide both insights and digital capabilities through our digibank app to help you access bond ETFs with ease.
Grow your wealth nowSources:
1 ETF, Bond ETF vs Stock ETF: What's the Difference?
2 DBS, Investing with only ETFs and unit trusts, February 2025
3 Statista, Stocks - Singapore, 2025
4 Statista, Stocks - Worldwide, 2025
5 Statista, Stocks - United States, 2025
6 DBS, Costs and fees of investing in ETFs, April 2024
7 DBS Treasures, Currency movements affect your investments – Here’s how, February 2025
8 Investopedia, Bond Funds vs. Bond ETFs: What's the Difference?, July 2024
9 Investopedia, International Bond Investing: Definition, Examples, and Risks, September 2023
10 DBS, Investing with only ETFs and unit trusts, February 2025
11 DBS, How to start investing in ETFs, April 2022
Disclaimers:
This article is for information only and should not be relied upon as financial advice. Any views, opinions or recommendation expressed in this article does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability. This article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.