Vanguard Announces Plans To Launch Total World Bond ETF

by John_Crichton

Source

SEC Filing here

VALLEY FORGE, Pa., May 21, 2018 /PRNewswire/ — Vanguard today filed a preliminary registration statement with the Securities and Exchange Commission for Vanguard Total World Bond ETF. The ETF will be the industry’s first U.S.-domiciled index product offering investors access to the entire global investment-grade bond universe in a single portfolio. It is expected to launch in the third quarter of this year.

The fund will be structured as an ETF of ETFs, investing directly in two existing low-cost ETFs: Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX). This structure enables the Vanguard Total World Bond ETF to achieve immediate scale by using existing exposure from the underlying ETFs and is expected to result in tighter bid/ask spreads and lower operating expenses than investing directly in the benchmark’s constituents. The approach is similar to Vanguard Total Corporate Bond ETF (VTC), which launched in November, 2017, and invests in Vanguard’s existing short-, intermediate-, and long-term corporate bond ETFs.

“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 new ETF seeks to track the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index and will have an estimated expense ratio of 0.09%.

This plus total word (VT/ VTWSX) will truly be a set it and forget it fund. Now if only they would offer Admiral shares of VTWSX…

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For those curious, as this fund is going to hold an existing international bond ETF (BNDX). You can view the current international weights, countries, and actual bonds holdings/duration here

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The proposed fees are already listed in the prospectus (SEC filing) I linked in the OP.

Annual Fund Operating Expenses

(Expenses that you pay each year as a percentage of the value of your investment)

Management Fees None

12b-1 Distribution Fee None

Other Expenses 0.00%

Acquired Fund Fees and Expenses 0.09%

Total Annual Fund Operating Expenses1 0.09%

My only complaint is its an ETF of ETFs, which may cause issues with Americans claiming the foreign tax credit, as was initially the case when Total International Stock launched as a fund of funds. Someone can correct me if I am wrong here.

 

Disclaimer: This content does not necessarily represent the views of IWB.

Consult your financial professional before making any investment decision.

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