Rick Ferri wrote:Are potential investors in this fund expecting higher returns? Hate to disappoint you, but this fund isn't going to yield any more than the Vanguard Total Bond Fund, and may yield less due to higher fees and hedging costs.
Those were two concerns I had. While talking about how nifty hedging is, Vanguard entirely failed to point out it costs money. Question for the experts here: how much do you estimate such hedging to cost? I know it costs, though I have no clue how much.
While it will have expenses of .20% for anyone with $10,000, that's still pretty expensive by Vanguard standards. At least it looks expensive when compared to their domestic bond funds that can all be had for 10-12 basis points. Even Total International Stock Admiral is 18 basis point, so here we have a bond fund that costs more than its equity relative.
I don't know if I'll buy it or not. It's certainly interesting, and I think it's a great move on Vanguard's part to finally provide any international bond fund. We've only been asking for the entire time I've been on this board (so for the last 14+ years).
I must say that with how low interest rates are I'm not real excited by a "total" fund that I certainly assume will have an intermediate maturity. I've moved most of my bond allocation to short-term bonds. Yeah, I'm giving up some yield with ST, but there's little risk that I'll miss out on massive capital gains as zero pretty much sets a floor for bond yields. While T-bills (and their Japanese equivalents) have gone marginally under zero in history, I don't seriously imagine that 10-year bonds are going to less than zero.