Investors have taken note of the BNDX story. The ETF had just over $830 million in assets under management in early January, already enough to make the fund one of the most successful ETFs to debut in 2013, but that AUM total has since swelled to $2.8 billion. [Fine Starts for These New ETFs]
“According to Vanguard, foreign currency accounts for two-thirds of the volatility investors experience when buying international bonds. As such, in an effort to isolate the credit and interest rate risk, BNDX employs currency hedging. As the bond index rebalances at the end of each month, Vanguard rolls forward one-month foreign exchange derivatives to offset any moves in the various currencies,” said S&P Capital IQ, which rates BNDX overweight.
BNDX has a 30-day SEC of about 1.1% and charges just 0.2% per year, making it less expensive than 81% of rival ETFs.
Vanguard Total International Bond ETF