Vanguard announced today that it expects to launch the Vanguard
Total International Bond Index Fund and its ETF Shares by the end
of Q2 2013.
Vanguard filed an amended registration statement for the fund
with the U.S. Securities and Exchange Commission that reflects a
new target index, as well as lower estimated expense ratios for
various share classes of the fund and the elimination of its 0.25%
planned purchase fee.
According to the filing, the institutional share class charges
just 0.12%, while the ETF shares will charge an annual expense
ratio of 0.20%. The Admiral and Investor shares will charge higher
expenses of 0.20% and 0.23% respectively.
The fund will be linked to the Barclays Global Aggregate ex-USD
Float Adjusted RIC Capped Index (USD Hedged). The index covers
approximately 7,000 corporate and government bonds (average credit
quality AA2/AA3) from 52 countries. The index caps its exposure to
any single bond issuer, including a government, at 20% to meet
regulated investment company (
) tax diversification requirements. The top country holdings as of
December 31, 2012, were Japan (23%), France (12%), Germany (11%),
and the United Kingdom (9%).
Vanguard also announced that the fund will be added as a
component to Vanguard's all-in-one funds, including its series of
12 Target Retirement Funds.
"Vanguard ispleased to bring its international fixed income
indexing expertise and low-cost approach to U.S investors.
International bonds can serve as an important diversifier,
especially for U.S. investors who currently have modest exposure to
the asset class," said Vanguard CEO Bill McNabb.
found that a strategic allocation to hedged international bonds
substantially broadens a U.S. bond portfolio, which can further
moderate risk in a diversified portfolio. Vanguard believes that
20% of the bond portion of a U.S. investor's portfolio can be
considered a potential target allocation to hedged international
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