Vanguard, the fund provider behind the market's biggest emerging
markets ETF-VWO-said it plans to launch an international aggregate
bond fund by the end of the second quarter, and with a cheaper fee
than originally expected.
In an amendment to a filing the company first submitted to
regulators in 2011, Vanguard said its planned Vanguard Total
International Bond Index Fund would be linked to the Barclays
Global Aggregate ex-USD Float Adjusted RIC Capped Index (hedged).
The fund will tap into a universe of 7,000 high-quality corporate
and government bonds from 52 countries.
What's more, the latest ETF-which, like all Vanguard
, will be a share class of a broader mutual fund-will have a 0.20
percent expense ratio, less than the 0.30 percent the company
originally projected. Vanguard also said it has eliminated a
planned 0.25 percent purchase fee on the fund.
International bond funds are growing in popularity with
investors, who increasingly look to the segment for
income-generating diversification that is also known to help
mitigate overall portfolio volatility.
"International bonds can serve as an important diversifier,
especially for U.S. investors who currently have modest exposure to
the asset class," Vanguard CEO Bill McNabb said in a press release,
noting that a strategic allocation to hedged international bonds
can help moderate risk in a portfolio.
The index underlying the strategy caps single-issuer exposure at
20 percent in order to meet regulated investment company (
) tax diversification requirements, the company said in a
By hedging currency exposure, Vanguard said the fund's returns
should more closely correlate with the underlying performance of
international bonds without currency distortions.
Japan, France, Germany and the United Kingdom represented the
biggest country allocations as of Dec. 31, 2012.
The investment-grade international bond portfolio will be
available in a mutual fund wrapper in the "Investor," "Admiral" and
"Institutional" share classes for 0.23 percent, 0.20 percent and
0.12 percent, respectively. That would make the "Institutional"
share class the only category cheaper than the ETF.
All of these planned fees have been lowered from earlier
projections of 0.40 percent, 0.30 percent and 0.25 percent,
The new strategy will also be added to Vanguard's fund of funds,
including target retirement funds, LifeStrategy funds and managed
payout funds, the company said.
Permalink | 'copy; Copyright 2009 IndexUniverse LLC. All rights
Don't forget to check IndexUniverse.com's ETF Data
2013 IndexUniverse LLC
. All Rights Reserved.