Now that yields have returned to fixed income, investors have, in turn, returned to bond funds. But within fixed income, are investors also turning to international bonds? They’re certainly turning to the Vanguard Total International Bond ETF (BNDX ).
The 16 ETFs that fall into Morningstar’s “Global Bond” and “Global Bond-USD Hedged” categories have brought in nearly $5 billion year-to-date as of June 30. Most of that came from BNDX, which attracted $4.2 billion.
Investors may be looking to international bond ETFs like BNDX because of the diversification that these funds provide. BNDX gives an investor broad exposure to economic environments outside of the U.S. and reduces home bias in a portfolio.
Offering Low-Cost, Broadly Diversified Exposure
“Investors continue to embrace ETFs that offer low-cost, broadly diversified exposure to major global asset classes for the core of their portfolios," said Janel Jackson, global head of ETF capital markets and broker and index relations.
Jackson added: “BNDX employs currency hedging strategies to mitigate volatility in exchange rates.” This enables "investors to enjoy the benefits of broad fixed income diversification without the impact of exchange rate volatility.”
With nearly 7,000 holdings as of May 31, BNDX is the largest global bond ETF on the market. The large number of holdings gives it the potential to track its benchmark with greater accuracy and precision.
VettaFi’s vice chairman Tom Lydon called Vanguard “the Hoover of the ETF industry” for how it’s vacuumed up investor dollars.
“They are just rock solid,” Lydon said. “They’re low-cost and always very, very dependable.”
At Exchange 2023, Vanguard CEO Tim Buckley said that the asset manager’s goal is “to make sure we’re producing the top-performing funds and ETFs out there.”
“We’ll wrap it with low-cost, scalable advice and deliver them on a world-class, digitally enabled platform,” he added. “And if you do that well and you can keep improving it, you’ll create value into the future.”
For more news, information, and analysis, visit the Fixed Income Channel.
