A sound investment process and strong management team underpin Vanguard Total World Bond ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's effective investment philosophy supports a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in AAA rated bonds and debt with 20- to 30-year maturities compared with category peers. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm a High Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Vanguard Total Bond Market ETF

Vanguard Total International Bond ETF

Vanguard Total World Bond ETF earns a High Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The main driver of the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.6 stars. The parent firm's five-year risk-adjusted success ratio of 72% also influences the rating. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their noteworthy success ratio suggests that the firm does well for investors and that this fund may benefit from that. This fund tracks an index, which supports the rating. Historical data, such as Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to track the performance of the Bloomberg Global Aggregate Float Adjusted Composite Index that measures the investment return of investment-grade U.S. bonds and investment-grade non-U.S. dollar-denominated bonds.  The fund is a fund of funds and employs an indexing investment approach designed to track the performance of the index, which is a custom, and USD-hedged index designed to track the market capitalized weights of the global investment-grade bond market and is comprised of the Bloomberg U.S. Aggregate Float Adjusted Index and the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index.  

 This strategy's 12-month yield is 3.9%, higher than its average peer's 2.9%. In addition, it has a 3.9% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). Typically, higher yields come at the cost of higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio has a higher average surveyed credit quality of A, compared with the typical peers' BBB, and it holds no non-investment-grade assets, despite the average peers' 8%. Strategies with less credit risk may help to provide a reliable ballast during periods of market stress. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 6.6-year duration, is expected to gain 6.6% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

High

Process

Vanguard Total World Bond ETF benefits considerably from its team, earning it an Above Average People Pillar rating. The fund takes a solo manager approach, with Joshua Barrickman as the only listed manager at the helm, who brings 18 years of portfolio management experience to the table. They manage a total of 19 strategies, with a Gold asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate. With only one manager listed on the strategy, the passive strategy is vulnerable to key-person risk. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

The Vanguard Group retains a High Parent rating. 

Mutual ownership, low costs, and a direct-to-investor playbook have helped spur Vanguard's leadership within the United States. Client service missteps notwithstanding, Vanguard over the past decade has grown its market share of U.S. open-end and exchange-traded fund assets at about a 5% annualized clip. At that rate, Vanguard's portion of the U.S. industry will cross 50% around 2035.

True, some competitors can now match or even undercut Vanguard on fees for broad market exposure. But Vanguard's burgeoning advice business could help it keep or even extend that lead. Through Digital Advisor and Personal Advisor Services, Vanguard has built an increasingly compelling ecosystem of advice for investors with simple to complex needs.

Vanguard is also using its advice business to expand overseas, but that's a work in progress. Of Vanguard's USD 7.6 trillion in global assets under management in March 2023, non-U.S. investors owned less than 10%, a figure that has changed little in recent years. Strategic shifts in China and other markets account for the slow pace, including returning money to institutions that had been layering on fees. Vanguard hopes to recoup that money and more by focusing on individual investors and the advisors who serve them. Provided Vanguard sticks to its playbook, its advantages should translate into success abroad, too.

Parent

Vanguard Total World Bond ETF

BNDW tracks a market-value-weighted index of global investment-grade bonds.

Rising bond yields are certainly racking the stock market thus far in the second quarter, but for those who are also bullish Treasury investors, it adds an additional headache. As such, it appears investors are heading for the exits on U.S. Treasuries and towards the entranceway of international and European bonds.

As Investors Exit Treasuries, Get International Bond Exposure

Global economies around the world in varying stages of their economic cycles. Therefore, international bonds can offer investors a taste of diversification that can serve its purpose in any bond portfolio.

Diversify Core Exposure With These International Bonds ETFs

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If fixed income investors like using history as a gauge for future performance, they may want to consider allocating to emerging market (EM) bonds. It's not just other bonds in the debt market space where EM shines, but also versus stocks.

An ETF to Ponder as History Supports Emerging Market Bonds

Thanks to artificial intelligence (AI) and investors still holding out hope that rate cuts will happen at some point, global equities are marching higher. That rally could eventually spill over into other assets like international bonds.

Global Equities Rally Could Spill Over Into International Bonds

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Interest rates are at their highest level in years, and this has created some excellent yields from fixed-income investments. Since price and yield have an inverse relationship, bond prices could rise significantly as interest rates fall.

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The Vanguard Total World Bond ETF provides diversified access to the worldwide investment-grade bond market. BNDW tracks against the Bloomberg Global Aggregate Float Adjusted Composite Index, offering a balanced approach to achieve global bond market presence. BNDW is a cost-effective option for investors looking for income generation and diversification in their portfolio.

BNDW: A Simple Fund Of Funds For Full Bond Market Access

Vanguard Total World Bond ETF offers exposure to investment-grade bonds worldwide, but its yield is diluted by low bond yields in many countries. The fund's American bonds have higher yields than its foreign bonds, making the US version of the fund a better option for higher yields. The global economy is slowing down, which could lead to a global recession and make international bonds even less attractive for American investors.

BNDW: Its Yield Is Getting Diluted By Its Country Mix

Vanguard Total World Stock ETF

Vanguard's brand is synonymous with broadly diversified passive index funds with the lowest possible expense ratios. This article serves as an updated guide to which of Vanguard's 81 ETFs best meet those objectives of simplicity, total market diversification, and low cost.

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BNDW offers a well diversified portfolio of bonds in terms of geography, sector, and credit risk. The 4.7% yield far outstrips the yield on the MSCI World equity index and the ETF faces much less downside risk in the event of a global recession.

BNDW: Global Bonds Preferable To Global Stocks

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High inflation and rising interest rates have hit bond portfolios hard, with core bond funds down 15% to 20% this year. For wary investors who still want broad-based fixed income exposure in their portfolios, they may want to use more targeted fixed income ETFs.

Diversify Your Portfolio With Broad-Based Fixed Income ETFs

BNDW is a global bond index ETF. The fund's holdings sport strong credit ratings, but yields are low, with BNDW currently yielding 3.1%.

BNDW: Global Bond Index ETF, No Compelling Investment Thesis

The Vanguard Total World Bond ETF (BNDW) invests to track the Bloomberg Global Aggregate Float Adjusted Composite Index, an investment-grade bond index. BNDW could be a Core holding as it simplifies exposure to investment-grade bonds, not only in the US, but internationally. That changes the risk/reward matrix from a pure US-only fund.

Vanguard Total World Bond ETF: A Core Holding

Bonds showed their nature as a safe haven following the invasion of Russia into Ukraine. Investors sought the safety of the bond markets as uncertainty entered the stock market indexes, especially in the Eurozone and Germany in particular.

Germany's Bonds Rally Following Russia's Invasion of Ukraine

Bond markets are bracing for rising rates as central banks are looking to tighten their monetary policies amid improving economies after the pandemic. That said, it's necessary to diversify in other parts of the world.

Need to Internationally Diversify Your Bond Portfolio? Here's 3 ETFs

As the Consumer Price Index (CPI) continues to rise and interest rates heading in the same direction, bond investors should look to international diversification as a hedging strategy. Diversifying away risk by dipping into bond markets in other parts of the globe can help with inflation, which can erode bond income.

Get Diversified Exposure Amid Rising Rates With International Bonds

The European Central Bank (ECB) is following the path of the U.S. Federal Reserve, tapering its bond purchases amid rising global inflation. Just like the U.S. Fed, the ECB shored up its bond market amid the fears of mass credit defaults in last year's initial pandemic scare.

As Europe Cuts Its Bond Purchases, Consider These International ETFs

Former U.S. Federal Reserve chairman Alan Greenspan made “irrational exuberance” a notable phrase ahead of the financial crisis in 2008, and now the word “exuberance” appears to be applicable to junk bonds. This is according to a European Central Bank (ECB) report that lumps in junk bonds with other assets seen as possibly over-inflating when [.

Are Overinflated Valuations Forming in Junk Bonds?

In today's low-rate environment, many fixed income investors are diversifying their portfolios with debt markets overseas. Vanguard offers two compelling options on this front.

Looking to Diversify Your Fixed Income Profile?

While investors can hold multiple debt issues in order to get core bond exposure, exchange traded funds (ETFs) like those available from Vanguard offer a way to minimize transaction costs associated with bonds. “No matter where you decide to buy or sell your bonds, you should be prepared to pay a transaction cost,” a Morningstar [.

Avoid Bond Transaction Costs with These Vanguard ETFs

A complete portfolio doesn’t have to consist of a chockful of asset classes spread across various parts of the globe for diversification. With a focus on cost nowadays, investors can build a minimal portfolio that accomplishes the basic needs of diversification via exchange-traded funds (ETFs)—in this case, just two ETFs will do.

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