Change distributing aggregate bond choice from Sterling to Euros, include synthetic and/or Floating Rate Bonds?

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Topic Author
DJN
Posts: 519
Joined: Mon Nov 20, 2017 12:30 am

Change distributing aggregate bond choice from Sterling to Euros, include synthetic and/or Floating Rate Bonds?

Post by DJN » Sun Mar 10, 2019 2:19 am

Hi,
in the wiki section for EU investors https://www.bogleheads.org/wiki/EU_investing there are two neat portfolio suggestions one for accumulating and one for distributing. I am clear about the accumulating, however I have a question about the distributing version in regards to the bond etf choice. This is an iShares developed world aggregate bond in USD and hedged to the British pound. This iShares bond fund however doesn't have a version hedged to the Euro. For completeness and for EU investors who don't want to hedge back to sterling with their distributing bond funds I thought it would be useful to seek some feedback here on a $ global aggregate bond fund which is hedged to the Euro:
Fixed Income
Title: SPDR Bloomberg Barclays Global Aggregate Bond EUR Hedged UCITS ETF - ISIN IE00BF1QPL78
TAG: SPFE
TER: 0.10%
Description: The Bloomberg Barclays Global Aggregate Bond (EUR Hedged) Index tracks bonds issued in emerging and developed markets worldwide. Rating: investment grade.
Size:€52M

One obvious comment is on the size.
Looking forward to your comments.I cannot find an equivalent global one other than this one.
DJN
Last edited by DJN on Wed Mar 13, 2019 6:17 am, edited 4 times in total.
Yah shure

finrod_2002
Posts: 28
Joined: Fri Feb 15, 2019 6:04 am

Re: EU: revising global distributing aggregate bond choice

Post by finrod_2002 » Sun Mar 10, 2019 4:59 am

There is also the Xtrackers Global Government Bond UCITS ETF. It is available in multiple currencies hedged and non hedged. The EUR hedged version has a distributed and an accumulating version. So plenty of combinations available.

Here an example of the EUR hedged distributing version:

https://etf.dws.com/en-lu/LU0690964092- ... ur-hedged/

barranwuffet
Posts: 1
Joined: Sun Mar 10, 2019 4:48 am

Re: EU: revising global distributing aggregate bond choice

Post by barranwuffet » Sun Mar 10, 2019 5:04 am

Using justetf.com I could not find a ETF tracking the Global Aggregate Bon EUR hedged that is also distributing. There are only the two Accumulating ones:

Title: iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc)
ISIN: IE00BDBRDM35
TER: 0.10%
Size: €265M

Title: Xtrackers Barclays Global Aggregate Bond UCITS ETF 5C (EUR hedged)
ISIN: LU0942970798
TER: 0.20%
Size: €270M

There are of course the non EUR hedged versions aswell. Is there any reason why it has to be a distributing one?

Topic Author
DJN
Posts: 519
Joined: Mon Nov 20, 2017 12:30 am

Re: EU: revising global distributing aggregate bond choice

Post by DJN » Sun Mar 10, 2019 5:12 am

Thanks Finrod,
That one is a government debt world bond.

the headline details are as below:

Fixed Income
Title: Global Government Bond UCITS ETF EUR - ISIN: LU0690964092
Tag: -
TER: 0.25%
Description: World govt bonds, developed, distributing, hedged
Size: €1.79Bn

Additional revision:
Another bond fund which is interesting and which is based upon a swap structure which introduces counterparty risk:

Fixed Income
Title: Xtrackers II Global Aggregate Bond Swap UCITS ETF - ISIN: LU0942970798
Tag: XBAG:GRXetra
TER: 0.20%
Description: Investment grade, devt, aggregate, govt, corp. (UCITS ETF synthetically replicates the performance of the Bloomberg Barclays Global Aggregate Bond Index)
Size: €638M

DJN
Yah shure

Topic Author
DJN
Posts: 519
Joined: Mon Nov 20, 2017 12:30 am

Re: EU: revising global distributing aggregate bond choice, include synthetic?

Post by DJN » Tue Mar 12, 2019 4:09 am

Any comments?
Yah shure

User avatar
BeBH65
Posts: 1561
Joined: Sat Jul 04, 2015 7:28 am

Re: EU: revising global distributing aggregate bond choice, include synthetic?

Post by BeBH65 » Tue Mar 12, 2019 8:21 pm

I find that giving a recommendation for funds for the stable portion of a EU portfolio is very difficult. For equity there seem to be obvious candidates. Much less so for the bonds portion. The whole choice for stable assets these is personal. Arguments can be found on this forum. i appreciate the posts by Valuethinker on this, but personality i do not follow his advise in all his details.

In my portfolio i hold bonds for stability, they let me sleep well.
Based on that i have decided that my bonds portion should avoid the currency volatility. Hence bonds in my home currency or hedged to it.
Generalising I would say that a fund hedged to GBP is not a good choice for a EU EUROpean Investor. >> we should adapt the wiki page.

Inspired by the BND choices that many US Bogleheads make, i have chosen for Euro aggregate bonds of intermediate duration. Very equivalent choices would be Euro government bonds, world bonds hedged to Euro, or world government bonds hedged to Euro. All of a duration that is lower then the investing horizon. I can also understand a choice for cash,CD or alike.

All of the choices have a lowish return. As such the choice between accumulating and distributing is much less important compared to equity. The tax free compounding of accumulating funds is much less relevant for bonds then for equity.

Personally i avoid synthetic funds. I do not consider them true indexfonds.

Generally, funds based in ireland are considered good, tax local tax laws and tax treaties in ireland are excellent. The situation for luxemburgisch funds is less onvoorstelbare, e.g. Luxemburgisch funds pay 30% US dividend witholding tax. Hence i go for ireland based Funds.

I tend to favour Ishares and Vanguard funds, i personality avoid Xtrackers funds for some unfounded perceived risk due to the link with deutsche bank.

A last criteria before selecting the actual funds is the cost and ease of trading. Here funds traded on the Amsterdam euronext Exchange suit me best.


A do find the die for a sample genetic portfolio great. Based on all this i find it very difficult to single in on a unique fund as advise in a sample genetic portfolio.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

Topic Author
DJN
Posts: 519
Joined: Mon Nov 20, 2017 12:30 am

Re: EU: Change distributing aggregate bond choice from Sterling to Euros, include synthetic and/or Floating Rate Bonds?

Post by DJN » Wed Mar 13, 2019 2:18 am

Would a floating rate bond be feasible, what do you think of the inherent risks? The current choice doesn't include a distributing hedged to Euro version.

Fixed Income
Title: iShares $ Floating Rate Bond UCITS ETF - ISIN IE00BF11F458
TAG: FLOE
TER: 0.12%
Description: Eur hedged, distributing, dev, corp. (The Fund seeks to track the performance of an index composed of short maturity, US Dollar denominated investment grade corporate bonds).
Size: €29M
Yah shure

Valuethinker
Posts: 39059
Joined: Fri May 11, 2007 11:07 am

Re: EU: Change distributing aggregate bond choice from Sterling to Euros, include synthetic and/or Floating Rate Bonds?

Post by Valuethinker » Wed Mar 13, 2019 5:08 am

DJN wrote:
Wed Mar 13, 2019 2:18 am
Would a floating rate bond be feasible, what do you think of the inherent risks? The current choice doesn't include a distributing hedged to Euro version.

Fixed Income
Title: iShares $ Floating Rate Bond UCITS ETF - ISIN IE00BF11F458
TAG: FLOE
TER: 0.12%
Description: Eur hedged, distributing, dev, corp. (The Fund seeks to track the performance of an index composed of short maturity, US Dollar denominated investment grade corporate bonds).
Size: €29M
I would not go for a fund that small.

Floating Rate Bonds are often issued by financial companies. In another financial crisis, this segment might get hurt.

Valuethinker
Posts: 39059
Joined: Fri May 11, 2007 11:07 am

Re: EU: revising global distributing aggregate bond choice

Post by Valuethinker » Wed Mar 13, 2019 5:09 am

DJN wrote:
Sun Mar 10, 2019 5:12 am
Thanks Finrod,
That one is a government debt world bond.

the headline details are as below:

Fixed Income
Title: Global Government Bond UCITS ETF EUR - ISIN: LU0690964092
Tag: -
TER: 0.25%
Description: World govt bonds, developed, distributing, hedged
Size: €1.79Bn

Additional revision:
Another bond fund which is interesting and which is based upon a swap structure which introduces counterparty risk:

Fixed Income
Title: Xtrackers II Global Aggregate Bond Swap UCITS ETF - ISIN: LU0942970798
Tag: XBAG:GRXetra
TER: 0.20%
Description: Investment grade, devt, aggregate, govt, corp. (UCITS ETF synthetically replicates the performance of the Bloomberg Barclays Global Aggregate Bond Index)
Size: €638M

DJN
I would go for the former. Lower credit risk.

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