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Vanguard Makes Foreign Debut With International Bond Fund

Friday, 31 May 2013 02:32 PM

Vanguard Group launched an international bond fund that may appeal to investors hunting for yield in overseas markets.

The Vanguard Total International Bond Index Fund is part of the company's first effort to offer foreign bond funds. The fund can be purchased now and its ETF shares, with a ticker of "BNDX," are expected to begin trading on June 4.

With the 10-year Treasury yielding around 2.16 percent, international bond funds are attracting U.S. investors with higher interest rates overseas. Some of the funds also can act as a hedge against a weakening dollar.

In March, U.S. investors made net purchases of $15.5 billion in bond funds. That marked the 19th consecutive month of net flows into bond funds, according to Lipper Inc., a unit of Thomson Reuters.

The Total International Bond Index Fund will track the performance of the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged). The index includes about 7,000 investment-grade corporate and government bonds from 52 countries.

The index caps its exposure to any single bond issuer, including government issuers, at 20 percent to meet regulated investment company tax diversification requirements, Vanguard said. The top country holdings, as of April 30, were Japan (22 percent), France (11 percent), Germany (11 percent), Italy (8 percent) and the United Kingdom (8 percent).

The expense ratios for the fund's Investor, Admiral, Institutional and ETF share classes will range from 0.12 percent to 0.23 percent.


© 2015 Thomson/Reuters. All rights reserved.

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