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Vanguard taps into global bonds with latest Ucits ETF

london-stock-exchangeFund behemoth Vanguard has launched a Ucits exchange-traded fund (ETF) on the London Stock Exchange and Deutsche Börse, specifically designed for investors seeking low-cost, diversified exposure to global bonds.

Covering both developed and emerging markets, the fund currently offers access to over 23,500 investment grade bonds issued by governments, corporates and agencies.

In an effort to minimise the risks that come with movements in currency exchange rates, the ETF has been “currency hedged”, according to the US-based firm. The ongoing charges figure has been set at 0.10%.

“Investors are often tempted to invest locally when it comes to fixed income, largely out of familiarity,” said Mark Fitzgerald, Vanguard’s head of ETF product management in Europe.

“However, the added diversity of a global bond allocation can actually reduce the risk of an investor’s fixed income portfolio, without necessarily decreasing the expected returns, provided the currency risk is hedged.”

The Vanguard Global Aggregate Bond Ucits ETF is managed by the company’s fixed income group. Vanguard now has 26 Ucits ETFs listed on the London Stock Exchange, and around $170 billion (€150.6 billion) in assets under management (AuM) across its European mutual fund and ETF range.

According to Vanguard, fixed income ETFs are “surging in popularity in Europe, as European investors increasingly recognise the benefits of using ETFs in their portfolios; low-cost, diversification, transparency and liquidity”.

This latest addition to its Ucits ETF range comes a day after it was announced that Vanguard had reduced prices on its UK-domiciled active fund range.

Prices on the Vanguard Global Equity, Global Equity Income, and multi-asset Balanced funds have decreased from 0.60% to 0.48% per year, while its Global Emerging Market Fund has been reduced from 0.80% to 0.78%.

At a global level, the Pennsylvania-headquartered company has $5.6 trillion in AuM as of the end of April this year.

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