Vanguard Announces Plans To Launch Total World Bond ETF

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MFInvestor
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Vanguard Announces Plans To Launch Total World Bond ETF

Post by MFInvestor » Mon May 21, 2018 9:57 am

Vanguard Announces Plans To Launch Total World Bond ETF

Press Release May 21, 2018 9:15 AM

https://www.prnewswire.com/news-releas ... 51727.html

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%.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Barry Barnitz » Mon May 21, 2018 10:33 am

Hi:

Here is the preliminary Prospectus filed with the SEC.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Fclevz » Mon May 21, 2018 10:34 am

I bet William Sharpe is liking this. It's one more step closer to his World Bond-Stock portfolio.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by cfs » Mon May 21, 2018 10:38 am

Here we go, get ready for the Two-Funder
-- Total World Stock
-- Total World Bond
Good luck y gracias por leer / cfs
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by UpperNwGuy » Mon May 21, 2018 10:39 am

Does Vanguard normally create ETFs before creating mutual funds? I thought the mutual funds usually arrived before the ETFs.
Retiree with a pension and a 60/40 taxable portfolio: Total Stock + Total Int'l + Total Bond + Interm Term Tax Exempt.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by lack_ey » Mon May 21, 2018 11:26 am

UpperNwGuy wrote:
Mon May 21, 2018 10:39 am
Does Vanguard normally create ETFs before creating mutual funds? I thought the mutual funds usually arrived before the ETFs.
These days they launch together.

Here the structure is another ETF of ETFs, like Vanguard Total Corporate Bond ETF (VTC) launched last year, for which there's not a mutual fund equivalent. Probably going to be none for the foreseeable future here as well.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Alexa9 » Mon May 21, 2018 11:29 am

Lots of threads about international bonds being overrated. I think a small allocation is okay but this fund (probably), Target Date, and Lifestrategy hold too much IMO.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Fudgie » Mon May 21, 2018 11:29 am

:oops:
Last edited by Fudgie on Fri Jun 08, 2018 6:15 pm, edited 1 time in total.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Mel Lindauer » Mon May 21, 2018 11:30 am

UpperNwGuy wrote:
Mon May 21, 2018 10:39 am
Does Vanguard normally create ETFs before creating mutual funds? I thought the mutual funds usually arrived before the ETFs.
As you may know, at Vanguard, ETFs are merely a share class of existing mutual funds. However, since this is an ETF of two already existing ETFs with underlying mutual funds, there's no need to create an underlying mutual fund.
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by abuss368 » Mon May 21, 2018 12:19 pm

Is there a foreign tax credit with the bond fund? If so would this present a problem like Total International Stock did when it was a fund of funds?
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by triceratop » Mon May 21, 2018 12:24 pm

Alexa9 wrote:
Mon May 21, 2018 11:29 am
Lots of threads about international bonds being overrated. I think a small allocation is okay but this fund (probably), Target Date, and Lifestrategy hold too much IMO.
A lot of those people make the point that it's added complexity to need to rebalance between domestic and international bonds and it's likely not worth the added complexity. Until now.

disclosure: I will not be using this fund.
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by lack_ey » Mon May 21, 2018 12:36 pm

abuss368 wrote:
Mon May 21, 2018 12:19 pm
Is there a foreign tax credit with the bond fund? If so would this present a problem like Total International Stock did when it was a fund of funds?
In 2017 the foreign tax was 0.34% of income dividend distributions for the international bond index fund.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by fortyofforty » Mon May 21, 2018 12:47 pm

To be totally "market neutral" would one have to invest all assets as a percentage of overall global capital allocations? Would an investor match how all investable assets are allocated? I believe bonds hold much more of the overall world's assets, but I don't remember where I read that. Would world cash also have to be included?

Disclosure: I will not attempt to be market neutral between stocks and bonds.
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Rick Ferri » Mon May 21, 2018 12:57 pm

cfs wrote:
Mon May 21, 2018 10:38 am
Here we go, get ready for the Two-Funder
-- Total World Stock
-- Total World Bond
Good luck y gracias por leer / cfs
I’m not a big fan of hedged international bonds, but I believe this will be the new two-fund portfolio, and quite frankly, I have no major problem with that.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by cfs » Mon May 21, 2018 1:04 pm

Thank you Mister Rick for the comments on the Two-Funder. Semper Fidelis, Semper Fortis, gracias por leer / cfs
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by pokebowl » Mon May 21, 2018 1:06 pm

Now if only they would offer admiral shares of VTWSX. :beer

I am not a fan of international bonds. They make more sense to hold at "market weight" for non-US investors than plain ol' US based on all the papers I've seen released over the last several years. Not opposed to them, just wouldn't go out of my way to seek them out. Now that there is a total offering coming out, can't really complain. Well suppose I can, I prefer mutual funds over ETFs, but I'll adapt.
There is nothing more expensive than something offered for free.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Pranav » Mon May 21, 2018 1:11 pm

What is the ratio of Domestic vs International in the Total Bond?
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Fclevz » Mon May 21, 2018 1:55 pm

Pranav wrote:
Mon May 21, 2018 1:11 pm
What is the ratio of Domestic vs International in the Total Bond?
Roughly 50/50. See this thread: viewtopic.php?f=10&t=207804&start=100#p3891874

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by nyclon » Mon May 21, 2018 3:12 pm

Fclevz wrote:
Mon May 21, 2018 1:55 pm
Pranav wrote:
Mon May 21, 2018 1:11 pm
What is the ratio of Domestic vs International in the Total Bond?
Roughly 50/50. See this thread: viewtopic.php?f=10&t=207804&start=100#p3891874
Interesting - that's a much different ratio than the 70/30 US/intl bond fund ratio vanguard uses in their fund of funds.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Day9 » Mon May 21, 2018 3:41 pm

And Vanguard continues to empower the average joe to get his fair share of the bounty of global capitalism. Thanks Mr Bogle!
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by zwzhang » Tue May 22, 2018 7:52 am

Rick Ferri wrote:
Mon May 21, 2018 12:57 pm
cfs wrote:
Mon May 21, 2018 10:38 am
Here we go, get ready for the Two-Funder
-- Total World Stock
-- Total World Bond
Good luck y gracias por leer / cfs
I’m not a big fan of hedged international bonds, but I believe this will be the new two-fund portfolio, and quite frankly, I have no major problem with that.

Rick Ferri
But it is a ETF of ETFs - BND and BNDX. BNDX (Vanguard Total International Bond ETF) is hedged.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by Rick Ferri » Tue May 22, 2018 11:50 am

zwzhang wrote:
Tue May 22, 2018 7:52 am
Rick Ferri wrote:
Mon May 21, 2018 12:57 pm
cfs wrote:
Mon May 21, 2018 10:38 am
Here we go, get ready for the Two-Funder
-- Total World Stock
-- Total World Bond
Good luck y gracias por leer / cfs
I’m not a big fan of hedged international bonds, but I believe this will be the new two-fund portfolio, and quite frankly, I have no major problem with that.

Rick Ferri
But it is a ETF of ETFs - BND and BNDX. BNDX (Vanguard Total International Bond ETF) is hedged.
Yeah, well. I'm OK with it. Not thrilled, but some things just don't make much of a difference.
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by MnD » Tue May 22, 2018 12:37 pm

I'll stick with Dodge and Cox Global Bond and a stable value fund.
Hedging and "biggest debtor" indexing just doesn't do it for me on the fixed income side.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by digit8 » Tue May 22, 2018 1:57 pm

pokebowl wrote:
Mon May 21, 2018 1:06 pm
Now if only they would offer admiral shares of VTWSX.
Still, it's down to a .19 EF, which ain't bad. I think the last time I seriously considered it, I was on the fence at like .32%, so I guess it's time to run the numbers again.....
"You can't latte yourself to bankruptcy. The bladder won't allow it." | -Katherine Porter

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by guyesmith » Tue May 22, 2018 2:40 pm

cfs wrote:
Mon May 21, 2018 10:38 am
Here we go, get ready for the Two-Funder
-- Total World Stock
-- Total World Bond
I bet ya this is the future of Vanguard Target Date Retirement Funds.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by cfs » Tue May 22, 2018 3:09 pm

guyesmith wrote:
Tue May 22, 2018 2:40 pm
cfs wrote:
Mon May 21, 2018 10:38 am
Here we go, get ready for the Two-Funder
-- Total World Stock
-- Total World Bond
I bet ya this is the future of Vanguard Target Date Retirement Funds.
Or a future "Vanguard Global Balanced Fund" y gracias por leer / cfs
~ Member of the Active Retired Force since 2014 ~

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by abuss368 » Tue May 22, 2018 3:58 pm

guyesmith wrote:
Tue May 22, 2018 2:40 pm
cfs wrote:
Mon May 21, 2018 10:38 am
Here we go, get ready for the Two-Funder
-- Total World Stock
-- Total World Bond
I bet ya this is the future of Vanguard Target Date Retirement Funds.
I have thought about this for a while. The question then is would all the “total” funds have expense ratio increases?
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by asset_chaos » Tue May 22, 2018 11:27 pm

Am I recalling correctly that total international started also as a fund of funds that transitioned later to a fund that is not a fund of funds? If so, it makes one wonder if Vanguard has a similar path planned for total world bond.
Regards, | | Guy

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by VinhoVerde » Wed May 23, 2018 12:57 am

This is useless to me. I've been looking for a low cost International Bond fund for years that is NOT hedged to the dollar. I don't understand why Vanguard only offers a dollar hedged version of this asset class. In my view, that defeats the purpose of this type of fund.
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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by AlohaJoe » Wed May 23, 2018 1:24 am

VinhoVerde wrote:
Wed May 23, 2018 12:57 am
This is useless to me. I've been looking for a low cost International Bond fund for years that is NOT hedged to the dollar. I don't understand why Vanguard only offers a dollar hedged version of this asset class. In my view, that defeats the purpose of this type of fund.
VinhoVerde
Vanguard has written multiple whitepapers on why. If you want to know you can read them. The most recent one just came out last month.

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Re: Vanguard Announces Plans To Launch Total World Bond ETF

Post by lostdog » Wed May 23, 2018 8:25 am

Great news. Although I am disappointed they don't have a mutual fund version.

Great news for the beginning to average investor. Simplicity at it's best. Thank you Vanguard.

I would change to the ETF version of Vanguard Total World equity index but I use the automatic investment tool at Vangaurd. I cannot use it for ETF's.

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