Vanguard Plans Global Bond ETF

Fund will be structured as an ETF-of-ETFs.
Reviewed by: Staff
Edited by: Staff

Vanguard has filed for an ETF that will cover the global bond market and invest primarily in two other Vanguard funds. The Vanguard Total World Bond ETF, when it launches, will be the first U.S.-listed ETF to cover the investment-grade bond universe in emerging as well as developed markets, including the U.S., according to Vanguard’s announcement.

The proposed fund is designed to track the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index, and will do so by investing in the existing $36.4 billion Vanguard Total Bond Market ETF (BND) and the $11.7 billion Vanguard Total International Bond ETF (BNDX). The prospectus indicates it will come with an expense ratio of 0.09%, which is more expensive than the 0.05% charged by BND and cheaper than the 0.11% charged by BNDX.

BND covers taxable investment-grade debt denominated in U.S. dollars with at least one year to maturity. BNDX covers investment-grade debt denominated in foreign currencies and applies currency hedging to its portfolio to minimize the impact of currency fluctuations.

This will be Vanguard’s second ETF-of-ETFs. Just last year, Vanguard rolled out the Vanguard Total Corporate Bond ETF (VTC), which invests in three of its other corporate bond ETFs: the Vanguard Short-Term Corporate Bond ETF (VCSH), the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) and the Vanguard Long-Term Corporate Bond ETF (VCLT).

And earlier this year, Vanguard deviated from its usual product approach with the launch of six actively managed factor funds.

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