Vanguard has today (27 March) launched a global fixed income exchange traded product (ETF) that will exclude nominal bond purchases from central banks.
It tracks the Bloomberg Global Treasury Developed Countries Float Adjusted index, which is adjusted to disregard bonds held by the Federal Reserve, Bank of England, Bank of Canada and Bank of Japan. It also excludes any bonds issued by emerging markets economies.
The Vanguard Global Government Bond UCITS ETF will be listed on the London Stock Exchange from today for an ongoing fee of 0.10%.
Mark Fitzgerald, head of product specialism at Vanguard Europe, said investors often have a home bias when it comes fixed income, but they could benefit from more global exposure.
“Investors are often tempted to invest locally when it comes to fixed income, largely out of familiarity,” he said.
“However, the added diversity of a global government bond allocation can reduce the risk of an investor’s fixed income portfolio, without necessarily decreasing the expected returns, provided the currency risk is hedged.
“By adding global government bonds, investors gain exposure to a greater number of securities, different inflation and economic environments, as well as business cycles from a wider range of markets.”