That’s why we’re introducing a new bond ETF (exchange-traded fund) that gives you a simple, low-cost way to invest in investment-grade bonds from around the world in a single ETF.
Vanguard Total World Bond ETF (BNDW) provides:
- Diversification. Interest rates and inflation are the 2 most important drivers of bond returns. Historically, these factors differ from country to country, making global bond exposure an effective way to diversify.
- Simplicity. Total World Bond ETF has exposure to both U.S. and international bond holdings, which means you can maintain a steady U.S. and non-U.S. weighting without having to rebalance yourself.
- Low costs. At an estimated expense ratio of 0.09%, Total World Bond ETF costs 84% less than the average expense ratio of 0.55% for the largest active global bond funds.*
As with all ETFs, there’s no minimum investment, so you can buy Total World Bond ETF for as little as the price of a share through your Vanguard Brokerage Account.
The role of bonds
Bonds play an important role in many investors’ portfolios. They may help diversify risk and generate income.
“Vanguard is 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’s simple, convenient, and highly diversified, with an estimated expense ratio in line with our current low-cost fixed income ETFs.”
Total World Bond ETF seeks to track the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index, which is comprised of about 19,000 investment-grade corporate, government, and securitized bonds from more than 30 countries.
To get exposure to the bonds in the index, the Total World Bond ETF invests in a combination of 2 underlying Vanguard ETFs®: Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX).
Total World Bond ETF is market-cap weighted, with the weighting of the underlying ETFs rebalancing on a monthly basis. For example, as of July 31, 2018, the allocation breakdown which most closely mirrored the weighting of the benchmark was: 46% BND and 54% BNDX.
A leader in bond indexing
Vanguard has been a leader in bond indexing since it launched the first bond index fund, Vanguard Total Bond Market Index Fund, in 1986. Vanguard Fixed Income Group, the Total World Bond ETF’s investment advisor, is one of the world’s largest bond fund managers with approximately $1.2 trillion under management. Vanguard has been a participant in the ETF industry for nearly 17 years, meeting the needs of a diverse set of investors with more than 75 ETFs that represent more than $746 billion in client assets.**