Income investors should add global bonds, Invesco says. Where the firm is finding solid yields
Investors seeking attractive yields should take advantage of the central bank policy divergence across the globe, according to Invesco. The Federal Reserve and Bank of England have been on hold this year, after cutting rates in late 2025. However, several other central banks have raised interest rates since the Middle East conflict began, including the European Central Bank , Australia and the Bank of Japan . Brazil, on the other hand, has been cutting rates . “That really allows opportunities for cross-market trades and extracting value in fixed income outside of the U.S.,” said Kristina Campmany, Invesco’s senior portfolio manager for global debt. That is what she and the team are doing with the Invesco Flexible Income ETF (FLXI) , which launched in February. The fund, which has a 30-day yield of 4.93% and a 0.39% expense ratio, has up to 40% of its holdings in international assets. FLXI mountain 2026-02-25 Invesco Flexible Income ETF since Feb. 25, 2026 In comparison, the Vanguard Total Bond Market ETF (BND) , which tracks the performance of investment-grade bonds in the United States, has a 4.65% 30-day SEC yield and a 0.03% expense ratio. Another U.S-focused fund, the iShares Core U.S. Aggregate Bond ETf (AGG) , has a 4.68% 30-day SEC yield and 0.03% expense ratio. “There’s just so many different crosswinds driving things. It provides a really interesting opportunity to be invested in all of these markets and say we have all of these different kinds of levers we can pull to kind of gain exposure and be involved,” Campmany said. Campmany isn’t the only one adding international exposure. Rick Rieder, BlackRock’s head of global fixed income, told CNBC in July he was diversifying into European credit and some emerging-market bonds. He’s also the manager of the iShares Flexible Income Active ETF (BINC) , which has roughly 30% of its holdings in international assets. Finding opportunities FLXI’s largest geographical holding outside of the U.S. is in the United Kingdom. The Bank of England’s policy members voted 6-3 to keep interest rates steady in July. The dissenters voted for a 25 percentage point hike. “There’s some scar tissue post the Liz Truss moment and liquidity in the market and people are trying to sift through that,” Campmany said. “But we do think that there’s value there.” Liz Truss served as prime minister for 44 days in 2022 after causing market turmoil with her failed budget. Campmany also sees value in emerging markets. “EM central banks post-Covid, when everyone was on these hiking cycles to try and address inflation, hiked a lot more aggressively than the developed market central banks,” she said. “So they have a lot more room to ease. You’re just starting at a lot higher base level interest rates.” She specifically likes Brazil and South Africa. FLXI has 5.2% of its holdings in South Africa and 1.5% in Brazil. Brazil’s central bank has already reduced rates three times and, according to a recent Reuters poll, is expected to cut again when it meets on Wednesday. Meanwhile, South Africa held rates steady in July, after raising them in May for the first time in three years. Within Central and Eastern Europe, she prefers Hungary and the Czech Republic. With the U.S., Invesco is leaning into securitized products, which it believes have attractive valuations compared with corporate bonds and more favorable technicals. They are also less impacted by any economic changes that can arise from artificial intelligence, as well as AI funding, the firm said. The holdings include some floating-rate assets, mortgage-backed securities and asset-backed securities.
