Vanguard has expanded its fixed income range with the launch of a global aggregate bond ETF,
The Vanguard Global Aggregate Bond UCITS ETF is listed on the London Stock Exchange and Deutsche Börse with an ongoing charges figure (OCF) of 0.10%.
This matches the charges on the iShares and SPDR products which were launched at the end of 2017 and at the start of 2018, respectively while HSBC GAM offers an index fund equivalent which has a total expense ratio of 0.45%.
Managed by the Vanguard Fixed Income Group (FIG), the ETF tracks the Bloomberg Barclays Global Aggregate Float-Adjusted and Scaled index, which offers investors exposure to 23,500 securities.
The Bloomberg Barclays Global Aggregate Float-Adjusted and Scaled index is a notoriously difficult index to track due to its sheer size.
The securities are issued by governments, corporates and agencies across both developed and emerging markets.
It is currency hedged in order to minimise the risks of movements in currency exchange rates.
Where do fixed income ETFs go from here?
Mark Fitzgerald (pictured), head of ETF product management, Europe, at Vanguard, commented: “Investors are often tempted to invest locally when it comes to fixed income, largely out of familiarity.
“However, the added diversity of a global bond allocation can actually reduce the risk of an investor’s fixed income portfolio, without necessarily decreasing the expected returns, provided the currency risk is hedged.
“By adding global bonds, you gain exposure to a greater number of securities, different inflation and economic environments, as well as business cycles from a wider range of markets.”
This is just the twenty-sixth ETF Vanguard has listed on the London Stock Exchange, however, ETF assets in Europe total €35.4bn as at the end of March, according to data from Morningstar.