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.
Next page: The latest news
The Latest News:
- Bond sales in peripheral Eurozone states are rising as the region’s recovery gains speed.
- “The euro-peripheral countries have come a long way from the near-death situation two years ago,” Soeren Moerch, head of fixed-income trading at Danske Bank A/S, said in a Bloomberg article. “The unemployment situation hasn’t deteriorated and the economic outlook has improved. As Spain’s funding plan today showed, their debt issuance is stabilizing. We think there is still room for their spreads to tighten further.”
- Ireland is set to sell its first long-term bond since paying off international bailout last month, Wall Street Journal Reports.
Vanguard Total International Bond ETF
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.