Vanguard expects to launch the first U.S.-based index ETF covering the entire global investment-grade bond universe in the third quarter.
The Vanguard Total World Bond ETF will be structured as an ETF of ETFs, investing in two other Vanguard bond funds: the Vanguard Total Bond Market ETF (BND) and the Vanguard Total International Bond ETF (BNDX), according to a preliminary registration statement filed with the Securities and Exchange Commission.
Vanguard used a similar approach in its Total Corporate Bond ETF (VTC), which invests in the company’s short-, intermediate- and long-term corporate bond ETFs. Unlike VTC, the new world bond ETF will invest in government bonds from the U.S. and other countries in addition to corporate securities.
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The new ETF “will be simple, convenient, and highly diversified with an expense ratio in line with our current low-cost fixed income ETFs,” say Vanguard Chief Investment Officer Greg Davis in a statement.
It’s expected that the new global bond ETF will charge an expense ratio of 9 basis points, or 0.09% — slightly more than the 0.05% fee for BND but less than the 0.11% charged for BNDX.