Vanguard Adds To Fixed Income Lineup With Total World Bond ETF

Last week, the second-largest U.S. issuer of exchange traded funds added to its lineup of fixed income ETFs with the debut of the Vanguard Total World Bond ETF BNDW.

BNDW, which launched Sept. 6, is the total world cousin of the popular Vanguard Total Bond Market ETF BND.

What Happened

As of July 31, BND had $36.4 billion in assets under management, making it one of the largest U.S.-listed fixed income ETFs.

The new ETF tracks the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index and is structured as an ETF of ETFs, an approach Vanguard uses with the Vanguard Total Corporate Bond ETF VTC, which debuted last November.

Why It's Important

BNDW's holdings are the aforementioned BND and the 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,” Pennsylvania-based Vanguard said in a statement.

BNDW charges 0.09 percent per year, or $9 on a $10,000 investment, making it cheaper than 90 percent of rival funds, according to issuer data. The new ETF's lineup is primarily comprised of investment-grade debt.

What's Next

“With BNDW, Vanguard is the first firm to offer U.S. investors a single index product with exposure to the entire global investment-grade bond universe,” Vanguard Chief Investment Officer Greg Davis said in the statement. “It’s a simple, convenient and low-cost way to obtain the diversification benefits offered by bonds of many countries and issuers.”

BND is a domestic fund, while BNDX allocates 56.70 percent of its weight to European bonds. 

Related Links:

A Call On Corporates

The Right ETF For September

Posted In: vanguardLong IdeasNewsBondsSpecialty ETFsNew ETFsTrading IdeasETFs

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.