Vanguard has launched the Vanguard Global Aggregate Bond UCITS ETF on the London Stock Exchange (LSE) and Deutsche Börse.
Vanguard has calculated that over $24 billion has flowed into Fixed Income ETFs across Europe this year.
It now offers 26 UCITS ETFs listed on the London Stock Exchange, and $170 billion in assets under management across its European mutual fund and ETF range.
The asset management company believes that European investors are recognising the benefits of the using ETFs in their portfolios, such as their low-cost, level of transparency and the opportunities they provide for diversification,
The new ETFs are designed for investors seeking very broad fixed income exposure. The Vanguard Global Aggregate Bond UCITS ETF provides access to over 23,500 investment grade bonds issued by governments, corporates and agencies across both developed and emerging markets. Furthermore, the ETF is ‘currency hedged’, a technique to minimise the risks associated with movements in currency exchange rates.
The Vanguard bond index UCITS ETFs will be managed by the Vanguard Fixed Income Group (FIG). FIG takes a team- based approach to investment management, avoiding a star manager system. The team is globalized, with trading desks in the United States, United Kingdom and Australia.
Mark Fitzgerald, Head of ETF Product Management, Europe believed that the ETFs would benefit clients as it would provide an opportunity for portfolio diversification, potentially reducing risk.
He said : “Investors are often tempted to invest locally when it comes to fixed income, largely out of familiarity. 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. By adding global bonds, you gain exposure to a greater number of securities, different inflation and economic environments, as well as business cycles from a wider range of markets.”
Vanguard was founded 1975, and is headquartered in Pennsylvania, USA. It manages $5.6 trillion on behalf of investors worldwide.
