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%.1
The benefits of global fixed income diversification
Vanguard research shows that currency-hedged global bond
exposure provides diversification benefits that can reduce
volatility and smooth returns over time. Two of the most important
drivers of bond returns are interest rates and inflation, factors
that fluctuate in other countries in patterns that have not
historically been correlated with the
United States or one another. A portfolio that includes
bonds of many countries and issuers may offer a diversification
benefit as a result of exposure to the different issuers and yield
curves. The Vanguard Total World Bond ETF will be diversified
across the maturity spectrum and credit risks of multiple
countries.
A fixed income leader
Vanguard Fixed Income Group will serve as the investment advisor
to Vanguard Total World Bond ETF. The group manages more than
$1.3 trillion in assets and employs
more than 175 investment professionals across the globe. Through
April 2018, Vanguard's global lineup
of 130 fixed income mutual funds and ETFs have experienced more
than $45 billion in global cash
flow.
The Fixed Income Group has had a particular focus on building
out the depth and breadth of the investment team, including adding
talented investment professionals to the portfolio management,
trading, and credit research functions around the globe. The group
has built out its active emerging markets team since 2013 by hiring
two portfolio managers in addition to a research lead, three
analysts, and two traders. The Fixed Income Group also enhanced its
active high yield capabilities in 2017 with the hire of a portfolio
manager as well as three analysts. These teams seek to add alpha
within the existing mandates of the group's active lineup.
About Vanguard
Vanguard is one of the world's largest
investment management companies. As of April
30, 2018, Vanguard managed $5.0
trillion in global assets. The firm, headquartered in
Valley Forge, Pennsylvania, offers
396 funds to its more than 20 million investors worldwide. For more
information, visit vanguard.com.
Asset figures as of April 30,
2018, unless otherwise noted.
1Estimated as of May 21,
2018
For more information about Vanguard funds and ETFs, visit
vanguard.com or call 800-662-7447 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.
A registration statement relating to the Vanguard ETF shares
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.
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.
U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573;
8,090,646; and 8,417,623.
Vanguard Marketing Corporation, Distributor of the Vanguard
Funds.
All investing is subject to risk, including the possible loss of
the money you invest.
Diversification does not ensure a profit or protect against a
loss.
Bond funds are subject to the risk that an issuer will fail to
make payments on time, and that bond prices will decline because of
rising interest rates or negative perceptions of an issuer's
ability to make payments. Investments in bonds issued by
non-U.S. companies and governments are subject to risks including
country/regional risk and currency risk.
Vanguard Total World Bond ETF is subject to currency hedging
risk, which is the chance that currency hedging transactions may
not perfectly offset a fund's foreign currency exposures and may
eliminate any chance for a fund to benefit from favorable
fluctuations in relevant currency exchange rates.
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SOURCE Vanguard