ETF Spotlight on the Vanguard Total International Bond ETF (NYSEArca: BNDX), part of an ongoing series.
Assets: $832.4 million
Objective: The Vanguard Total International Bond fund tries to reflect the performance of the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index, which includes government, agency, corporate and securitized non-U.S. investment-grade fixed income investments issued in foreign currencies but also includes a hedge to its currency exposure.
Holdings: Top holdings include German and Japan government bond securities of varying yield and maturities.
What You Should Know:
- The Vanguard Group sponsors the fund.
- BNDX has a 0.20% expense ratio.
- The ETF has 2,169 components, and the top ten make up 5.8% of the overall portfolio.
- Credit quality breakdown includes AAA 26.3%, AA 44.8%, A 10.7% and BBB 18.3% – ratings BBB and above are considered investment grade.
- Issuer allocations include government 73.1%, agency/quasi-agency 2.5%, supranational 3.0%, corporate 14.5%, non-agency residential MBS 1.0%, asset-backed 0.3%, covered bond 3.5% and municipal 0.3%.
- The fund has an effective duration of 6.62 years.
- BNDX shows a 1.63% 30-day SEC yield.
- The ETF is up 0.3% over the past month, up 0.6% over the last three months and down 1.1% since it began trading at the start of June, 2013.
- Top country allocations include Japan 22.9%, France 11.9%, Germany 9.5%, U.K. 8.1%, Italy 7.9%, Canada 5.6%, Spain 5.5%, Netherlands 4.8%, Supranational 2.9% and Australia 2.8%.
- The underlying index promises to provide a type of hedge against currency risk in investing in foreign currency-denominated bond securities.
- “To minimize the currency risk associated with investment in bond denominated in currencies other than the U.S. dollar, the Fund will attempt to hedge its currency exposures,” according to a prospectus note.
- When foreign currencies depreciate relative to the U.S. dollar, foreign investments, which are denominated in the local currency, can decline in value when converted back in to a stronger U.S. dollar.
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