Vanguard ETF will offer exposure to global investment-grade bond universe

May 21, 2018

 

Vanguard today filed a registration statement with the U.S. Securities and Exchange Commission for the proposed launch of Vanguard Total World Bond ETF during the third quarter of 2018. Vanguard's Fixed Income Group will serve as advisor to the ETF.

The ETF will gain exposure to the global investment-grade bond universe by investing in a combination of Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX) held at the market-capitalization weights of the global bond market.

The Total World Bond ETF will offer a single ETF share class with an estimated expense ratio of 0.09%. As an ETF of ETFs, its direct investment in the existing Vanguard total bond ETFs will enable it to achieve immediate scale and access to the global investment-grade bond market. The ETF will seek to closely match the returns of the benchmark by keeping the expense ratio and transaction costs lower for investors.

"With the Total World Bond ETF, Vanguard will be the first firm to offer U.S. investors a single index product with exposure to the entire global investment-grade bond universe," said Vanguard Chief Investment Officer Greg Davis. "It will be simple, convenient, and highly diversified, with an expense ratio in line with our current low-cost fixed income ETFs."

The Total World Bond ETF will be benchmarked to the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index, which provides a broad-based measure of the global investment-grade fixed-rate debt market, including government, corporate, and securitized bonds, all with maturities of more than one year. As of March 30, 2018, the index comprised approximately 44% U.S. bonds and 56% non-U.S. bonds.

Vanguard has been a pioneer in bond indexing, having launched the first bond index fund, Vanguard Total Bond Market Index Fund, in 1986. Vanguard's Fixed Income Group is one of the world's largest bond fund managers with more than $1.4 trillion under management. Vanguard has been a participant in the ETF industry for more than 17 years, meeting the needs of a diverse set of investors with 77 ETFs that represent more than $746 billion in client assets.*

* Data as of March 31, 2018.

Notes:

  • A registration statement relating to the Vanguard Total World Bond ETF has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
  • For more information about Vanguard funds, visit advisors.vanguard.com or call 800-997-2798 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.
  • Vanguard ETF Shares are not redeemable with the issuing fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
  • Diversification does not ensure a profit or protect against a loss.
  • All investing is subject to risk, including the possible loss of the money you invest. Bond funds are subject to interest-rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Investments in bonds issued by non-U.S. companies and governments are subject to risks including country/regional risk and currency risk.