Hey Ed,

Glad you like the books.

For sovereign debt, assuming you have something along the lines of $10-20k or more to play with, your best bet is always to go directly to the source.  Govts generally just love to sell you their debt, so most have decent individual investor programs.  Eg in the case of NZ, "Kiwi Bonds" in denominations as small as $1000, with an interest rate of 7% (what the heck? yes really 7%) for the one year maturity, or 6.5% for the 2 year.  See http://www.nzdmo.govt.nz/informationfor  .  This would be a high yield even after appropriate currency hedging.

Let's not forget Singapore's SGS bonds, low-yielding but a very strong currency - http://asianbondsonline.adb.org/how_to_buy_bonds/nd_market.php?ABI_Market_Name=SG and http://www.sgs.gov.sg/index.html .  Or Switzerland (no link but I'm sure they have a similar retail program). You get the picture.

I think, even aside from the obligatory 1% off the top that most funds take in fees, I just wouldn't trust them to be non-stupid/non-crooked.  Where most people look for "performance" in a manager, I see a risk of a blowup even if the underlying assets are sound, and am much happier if I can bypass that entirely.  For safe, it is hard to beat govt bonds in your possession that are also registered in your name ;). Well, gold bullion in your possession certainly does beat that, but not much else.

Nod to what you said about Turkey/Russia/Brazil etc.  Serious trust issues there - maybe ok for a quick stock speculation, but bonds, with a strictly limited upside and unlimited downside?  The words "ten foot pole" come to mind.  And yes, almost all foreign bond funds hold at least some of that (MERKX being a rare exception)

One last piece of advice... I highly recommend you engage in at least some speculative trading.  It "feels" like we are very close to a Black Swan event ... today's Bear Stearns blowup was maybe a small black swan, whether it grows up remains to be seen.  I think, without predicting the direction of any changes, it is very safe to say that large movement in the relative values of different asset classes is likely in the not too distant future.  The whole financial system is like a taut string, it can either snap or one end can fly loose and whip around (concretely: high inflation, stock market stays flat; or deflation, stock market drops like a rock; or ...)  Hard to predict exactly except that there will be LARGE moves.  In such an environment, it is very prudent to take strangle option positions on some of the major markets (s&p500, dollar, oil, bonds? - a few other things can go on there, your pick).  A strangle is an option position that is the combination of out-of-money put and call, it makes you money if the underlying goes up OR down a lot.  This serves as a "dynamic anchor" in case everything goes haywire... in a way it is like saying that you want to preserve the purchasing power you have today across all the markets you have strangles on, with a small chance of spectacular gains on top of that.  As I said, just prudent... if you're very risk adverse, 10% of portfolio, maybe?  I have my guesses about which direction things will go, so I am somewhat weighing my positions towards that, but yes I also have options in the opposite direction.   

--Rayden