In response to the growing appetite for fixed-income assets outside of the U.S., WisdomTree has launched an actively managed global corporate bond exchange traded fund.
The WisdomTree Global Corporate Bond Fund (NYSEArca: GLCB) will try to generate returns through income and capital appreciation by investing in debt of corporate issuers from countries around the globe. GLCB has a 0.45% expense ratio.
“We believe fixed income investors should not limit themselves to a domestic universe of corporate debt securities when an expanding $11.2 trillion global credit market presents robust opportunities in our increasingly global economy,” Luciano Siracusano, WisdomTree Chief Investment Strategist, said in a press release.
“We believe the strong balance sheets of multinational corporations, continued demand for corporate issuance and the persistence of low interest rates around the world present attractive opportunities in global credit markets,” Ryan Brist, GLCB Portfolio Manager of Western Asset, said in the press release.
The ETF will have 55% of its holdings in investment grade assets and it may include U.S. and international high yield debt, along with emerging market corporate debt. Additionally, the active ETF will also hedge non-U.S. currency exposure back to the U.S.. Consequently, negative performance due to foreign currency depreciation would be mitigated.
Currently, GLCB’s asset allocations include corporate bonds 51.5%, foreign bonds 46.0% and preferred stock 2.5%.
The credit quality breakdown includes AA 9.2%, A 40.4%, BBB 23.3%, BB 6.1%, B 15.0% and below B 6.2%.
Country allocations include U.S. 51.5%, U.K. 9.6%, Italy 4.5%, Russia 4.5%, Mexico 3.6%, France 3.2%, Germany 3.0%, Brazil 3.0%, Hong Kong 2.9%, Spain 2.9%, Netherlands 2.7%, Australia 2.5%, Belgium 2.2%, Canada 1.5% and Colombia 1.0%.
Considering the low interest rate environment, potential investors should be aware that the fund will have an aggregate duration of two to 10 years. Duration is a measure of a fixed-income asset’s sensitivity to changes in interest rates – lower durations tend to translate to smaller portfolio changes due to rising interest rates.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.