When it comes to investment-grade corporate bond
, one fund dominated the arena for years. However, as investors
have sought higher yields beyond the confines of U.S. borders,
some ETF issuers have obliged with new funds offering access to
international investment-grade corporates.
The latest entrant to that competition is the WisdomTree
Global Corporate Bond Fund (
), which debuted Thursday. GLCB will seek to maintain at least 55
percent of its holdings in investment grade assets, with the
ability to also invest in U.S. and international high-yield as
well as developing world corporates, according to a statement
issued by WisdomTree.
intends to have an intermediate-term duration of
two to 10 years
For now, the actively managed GLCB devotes over 51 percent of
its weight to U.S. corporates. The U.K. is the next largest
country weight at 9.6 percent, but after that GLCB does an
admirable job of mixing developed and developing markets
For example, Italy and Russia essentially have the same
weights at just under 4.5 percent while Brazil and Germany each
account for just over three percent of the new ETF's weight.
Other country allocations include Mexico, France, Canada and
"We believe a broad global approach incorporating active
credit analysis presents an opportunity to manage risk, liquidity
and find opportunities for relative value over changing credit
and interest rate cycles," said WisdomTree Chief Investment
Strategist Luciano Siracusano in the statement. "In contrast to
market capitalization-based fixed income index funds, GLCB is an
actively managed ETF designed with the flexibility to invest -
and rotate - across fixed income sectors and issuers around the
Regarding credit risk, while GLCB can tap various high-yield
markets, its current holdings are predominantly investment-grade.
Nearly 73 percent of the fund's holdings are rated AA, A or
GLCB's top holdings include issues from Bank of America (NYSE:
), HSBC (NYSE:
), Goldman Sachs (NYSE:
), Russian energy giant Gazprom and Anheuser-Busch Inbev (NYSE:
). The fund's weighted average coupon is 5.7 percent and its
average years to maturity is 6.17.
While a corporate bond ETF with an international focus may
seem like a niche concept to some, the opposite is actually true
and WisdomTree has proven as much with another actively managed
product. The firm launched the WisdomTree Emerging Markets
Corporate Bond Fund (NASDAQ:
) in March 2012.
Providing investors exposure to emerging markets corporates
has proven to be a winning idea. Not only did EMCB's debut lead
to the debut of two copycat funds from rival issuers, but the ETF
now has over $112 million in assets under management, making it
one of last year's more successful new product launches.
With an expense ratio of 0.45 percent, GLCB is less expensive
than EMCB, which charges 0.6 percent. Both ETFs are sub-advised
by Western Asset Management.
For more on ETFs, click
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