Vanguard has filed a preliminary registration statement with the Securities and Exchange Commission for Vanguard Total World Bond ETF, the first US-domiciled index product offering investors access to the entire global investment-grade bond universe in a single portfolio.
The fund, which is expected to launch in the third quarter of this year, 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,” says 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 per cent.
