When you're looking for fixed-income investments, you may find that overseas governments issue bonds with greater yields than U.S. government bonds. One way to take advantage of these better rates abroad is by investing in an international bond fund. A fund may have access to bond markets that are closed to you as an individual investor, and it has the resources to achieve a level of diversification that's beyond the reach of most individual investors.
International bond funds come in several varieties. Some funds buy government bonds only. Some buy corporate bonds. Some buy a mix. Some concentrate on developed nations and others seek more volatile but potentially more rewarding returns from emerging markets. And as with other international funds, you can find ones that are spread out geographically or specialize in a particular region or country.
In terms of risk and return, bonds in foreign currencies are subject to both the interest rate fluctuations in the country where they're issued and fluctuations in currency exchange rates. While those factors may affect your return, all the details are handled by the fund.
Jeffrey Rosensweig, Goizueta Business School, Emory University
You should note that many bond funds hedge their portfolios against fluctuations in currency exchange rates that could negatively affect their returns. However, the returns of unhedged bond funds are based on both interest rates and currency fluctuations, which can make them more volatile. So when the dollar strengthens, returns on unhedged bond funds will generally be diminished. But when the dollar weakens, unhedged funds get a boost from the favorable exchange rate. If you want to diversify your currency holdings, you may want to avoid hedged funds.
International bond funds come in several varieties. Some funds buy government bonds only. Some buy corporate bonds. Some buy a mix. Some concentrate on developed nations and others seek more volatile but potentially more rewarding returns from emerging markets. And as with other international funds, you can find ones that are spread out geographically or specialize in a particular region or country. 
Jeffrey Rosensweig, Goizueta Business School, Emory University 