Vanguard today launched the first U.S.-based ETF that covers the global investment-grade bond universe in one fund.
The Vanguard Total World Bond ETF (BNDW), is a fund of funds, investing in two Vanguard ETFs: the Vanguard Total Bond Market ETF (BND), which holds primarily U.S. investment-grade bonds, both corporate and government; and the Vanguard International Bond ETF (BNDX), which invests in foreign investment-grade bonds, also government and corporate.
The new global bond ETF has an estimated expense ratio of 0.09% and tracks the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index, which is down 2% year to date. Its structure is similar to Vanguard’s Total Corporate Bond ETF (VTC), which invests in Vanguard’s short-, intermediate- and long-term corporate bond ETFs.
“With BNDW, Vanguard is the first firm to offer U.S. investors a single index product with exposure to the entire global investment-grade bond universe,” said Chief Investment Officer Greg Davis in a statement. “It’s a simple, convenient and low-cost way to obtain the diversification benefits offered by bonds of many countries and issuers.”
Individuals who invest in the new fund in combination with the Vanguard Total World Stock ETF (VT) — which has more than $12.4 billion in assets — will gain access to more than 20,000 stocks and bonds at an estimated asset-weighted cost of less than 10 basis points, according to Vanguard.
The new ETF debuts less than five months after Vanguard filed with the Securities and Exchange Commission. Joshua C. Barrickman, CFA, principal of Vanguard and head of of its Fixed Income Indexing Americas unit, is its portfolio manager. Vanguard manages about $1.4 trillion in bond assets and over $5 trillion in total assets.