Vanguard Total International Bond offers a market-cap-weighted portfolio of global investment-grade, non-U.S.-dollar-denominated bonds. Its broad scope and diversified portfolio cut back on credit risk and transaction costs, providing an effective way to index this diverse opportunity set. 

The fund tracks the Bloomberg Global Aggregate ex-USD Float-Adjusted RIC Capped Index, which captures investment-grade bonds not denominated in U.S. dollars. Eligible bonds must have at least one year remaining to maturity and satisfy size requirements based on their respective local currencies. It weights selected bonds by their market value, capping positions to prevent issuer concentration according to the Regulated Investment Company requirements. The index excludes holdings of central governments from its weighting calculation to reflect the amount of a bond’s value that is publicly available.

The fund also caps its exposure to Chinese local-currency debt over liquidity concerns. Given the fund’s large asset base and the prevailing liquidity challenges in the Chinese bond market, this prudent limit can alleviate transaction costs and operational challenges when these bonds are difficult to purchase.

The portfolio is heavy in government debt, as its weighting scheme tilts the fund toward the largest issuers. As of July 2023, the fund parked around 80% of its assets in government debt, much higher than the category average of 50%-60%. These securities are relatively more liquid than corporate or securitized bonds, which will help the fund keep trading costs down. While the fund's largest currency exposure is to the euro, its largest single-country exposure is Japan, followed by France and Germany. 

A heavy allocation to developed-markets and government debt keeps the fund’s credit risk profile quite muted. This can provide better protection during credit shocks but will also cause it to miss out during risk-on markets. The fund tends to overweight bonds rated AA and A, while more flexible peers in the global bond-USD hedged Morningstar Category often venture into bonds rated BB. 

Nonetheless, the fund’s diversified low-fee portfolio should provide some protection during credit shocks while maintaining a performance edge against category peers.

Analyst Rating

A sensible approach to a diverse opportunity set.

Analyst

Lan Anh Tran

Vanguard Total International Bond provides broad exposure to investment-grade non-U.S.-dollar-denominated bonds. Its diversified, market-cap-weighted portfolio dampens some of the risk of indexing such a diverse market. The fund earns a Process rating of Above Average.

Above Average

Process

An experienced, well-equipped team manages all of Vanguard's fixed-income index funds, underpinning an Above Average People Pillar rating.

A global subteam of portfolio managers handles this fund, with a presence in the United States, United Kingdom, and Australia to ensure around-the-clock market coverage. They draw on Vanguard’s team of ETF specialists and local sector specialists to efficiently sample the index portfolio and construct the ETF creation/redemption basket. The managers are also supported by Vanguard’s trading desk for order execution, as well as a data team that processes index changes and corporate actions. Recently, the team also added another headcount to its quantitative unit to further develop its optimization sampling model. This strong supporting cast frees up time for the managers to focus on risk and index tracking. An independent risk management team provides feedback regularly and conducts formal reviews on the fund’s tracking performance.

Joshua Barrickman and Tara Talone are the named managers of this fund. Barrickman is head of Vanguard’s U.S. fixed-income indexing group, while Tara is a senior manager responsible for global bond funds. Barrickman has managed the fund since 2013; Talone joined him in late 2022, having been with Vanguard since 2006.

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.

High

Parent

Vanguard Total International Bond ETF

BNDX tracks an investment-grade, non-USD denominated bond index, hedged against currency fluctuations for US investors.

Vanguard Total World Bond ETF

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

BNDX is a well-diversified ETF that mainly focuses on non-US government bonds with a low expense ratio of 0.07%. Vanguard Total International Bond Index Fund ETF is not suitable for diversifying from equities due to its sensitivity to changes in interest rates. The Fund's only use is for short- to medium-term speculation on interest rates. Hold if you own it, Buy if you want to speculate on falling global interest rates. All other investors should avoid it.

BNDX: A Bet On Falling Interest Rates And Nothing More

Vanguard Total Bond Market ETF

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

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

Vanguard Emerging Markets Government Bond ETF

The inclination that yields will eventually fall as the Federal Reserve loosens monetary policy could have fixed income investors looking overseas in search of more yield. The eurozone, in particular, is starting to see heightened demand for bonds as yield seekers look to lock in rates now before central banks start easing monetary policy.

Reach for More Yield Overseas With This International Bond ETF

Investing in international bonds offers diversification, higher yields, risk management, and access to different markets. Vanguard Total International Bond Index Fund ETF Shares is a good option for investors looking to enter the international fixed-income securities market. The BNDX ETF is richly diversified, heavily tilted towards Europe and Asia, and primarily invested in foreign government-related issuers.

BNDX: A International Bond Proxy

ARK Innovation ETF

VanEck Vectors BDC Income ETF

Amplify Transformational Data Sharing ETF

Manager Directed Portfolios - iM DBi Managed Futures Strategy ETF

iShares MSCI Emerging Markets ex China ETF

Fidelity Blue Chip Growth ETF

SPDR S&P China ETF

iShares Core MSCI Emerging Markets ETF

iShares Core S&P 500 ETF

JPMorgan Equity Premium Income ETF

Kraneshares Dynamic Emerging Markets Strategy ETF

AdvisorShares Pure US Cannabis ETF

Wisdomtree US Quality Growth Fund

Invesco QQQ

SPDR S&P 500 ETF Trust

iShares 20+ Year Treasury Bond BuyWrite Strategy ETF

Vanguard S&P 500 ETF

Vanguard Short-Term Inflation-Protected Securities ETF

Vanguard FTSE Emerging Markets ETF

SPDR S&P Biotech ETF

Technology Select Sector SPDR Fund

Hello! This is MarketWatch reporter Isabel Wang bringing you this week's ETF Wrap. In this week's edition, we look at ETF strategies that have exploded in popularity in 2023, and whether they will continue to gain momentum in the year ahead.

These ETF strategies were big winners in 2023. Here's where one CFRA analyst sees them going next year.

Vanguard Intermediate-Term Treasury ETF

Vanguard Long-Term Treasury ETF

Vanguard Tax-Exempt Bond Index ETF

While 2022 was a brutal year for bonds, fixed income enjoyed many tailwinds this year, from high interest rates to lowered inflation to a less volatile economy. This made 2023 the year for fixed income.

The Most Popular Vanguard Fixed Income ETFs in 2023

We talk a lot about high yields with U.S. fixed income. But international bond funds aren't doing too shabby these days, either.

Consider BNDX as International Bonds Outpace Domestic Yields

After an atrocious 2022, fixed income is clearly alive and well. Just look at the Vanguard Total Bond Market ETF (BND).

Vanguard's BND Becomes First Bond ETF to Reach $100B in Assets

On this episode of ETF Prime, host Nate Geraci speaks with a pair of individuals discussing several different ETF topics. His guests include VettaFi's Todd Rosenbluth, who discusses VOO's thirteenth birthday, Vanguard's ETF success, and more.

ETF Prime: Rosenbluth on Vanguard's ETF Success and More

Vanguard Total International Bond ETF owns a portfolio of investment-grade international treasury and corporate bonds.

BNDX: Capital Appreciation Expected In 2024 And Likely To Continue Through 2025

Traditionally, the average investor has been advised to place 60% of their holdings in stocks and the other 40% in bonds. After all, diversification has long been the best way to even out the most volatile periods in the markets.

BNDX & the Case for International Bonds

Inflation is continues its stay in the current macroeconomic environment. As such, the threat of a recession still looms, which could be a boon for bullish bond investors.

Recession Risk Still in Play for Bond Bulls

Stubborn and sticky inflation could keep interest rates elevated for some time, translating into the continuance of higher yields in the bond market. One of the reasons for higher bond yields, as a Markets Insider article pointed out, has been a stronger-than-expected economy.

Strong Economy Is Supporting Higher Bond Yields

Higher interest rates have led to higher yields across most asset classes and funds. BNDX invests in international bonds but has seen comparatively little benefit from higher rates. An overview of the fund follows.

BNDX: No Investment Thesis, No Reason To Buy

iShares JP Morgan USD Emerging Markets Bond ETF

Fixed income has become one of the hottest trending topics in the finance world due to the uncertain economic environment. The asset class has seen a huge increase in interest from investors and advisors alike.

International Bond ETFs Can Benefit Investors' Portfolios

Now that yields have returned to fixed income, investors have, in turn, returned to bond funds. But within fixed income, are investors also turning to international bonds?

BNDX Tops International Bond Fund Flows

iShares Core Growth Allocation ETF

Capital Group International Focus Equity ETF

Xtrackers MSCI Emerging Markets Hedged Equity ETF

WisdomTree Emerging Markets High Dividend Fund

ALPS Emerging Sector Dividend Dogs ETF

Invesco S&P Emerging Markets Low Volatility ETF

Emerging Markets Internet & Ecommerce ETF

iShares MSCI Taiwan ETF

Franklin FTSE India ETF

Freedom 100 Emerging Markets ETF

iShares Core International Aggregate Bond ETF

JPMorgan Emerging Markets Equity Core ETF

KraneShares CSI China Internet ETF

Matthews Emerging Markets Equity Active ETF

Invesco Emerging Markets Sovereign Debt ETF

Emerging markets can come with a lot of growth potential. However, they also usually have more volatility than you might get with developed markets.

VettaFi Voices On: Investing in Emerging Markets

Vanguard Short-Term Tax-Exempt Bond ETF

U.S.-listed fixed income ETFs had net inflows of $52 billion in the first quarter of 2023, equal to 65% share of the industry's cash haul despite being just 20% of the assets.

Strong Demand for Vanguard Core Bond ETFs in 2023

Franklin International Aggregate Bond ETF

The Franklin International Aggregate Bond ETF invests based on the Bloomberg Global Aggregate ex-USD Index Hedged USD. The Vanguard Total International Bond ETF invests based on the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged).

FLIA Vs. BNDX As Possible International Bond Core ETF

Vanguard Total Stock Market ETF

Vanguard Extended Market ETF

Vanguard Total International Stock ETF

I discuss two of James Picerno's posts (Part I & Part II) from last week. I conclude that a market uptrend began on March 30 and 31.

The Current Upswing Started In October 2022: Updated As Of March 31, 2023

iShares Core U.S. Aggregate Bond ETF

iShares Core S&P Mid-Cap ETF

iShares Core S&P Small Cap ETF

iShares National Muni Bond ETF

Vanguard FTSE Developed Markets ETF

This year, let alone a few days in mid-March, is a good reminder of the role bonds and bond ETFs can play within a portfolio.

Once Again, Bond ETFs Provide Diversification Benefits

With the recent plunge in global interest rates, foreign fixed income has attracted risk-conscious buyers. Unlike the past, a strong starting yield today makes BNDX a better risk/reward play from a duration point of view.

Foreign Investment-Grade Bonds Rallying, Time To Diversify With BNDX

SPDR Bloomberg 1-3 Month T-Bill ETF

Vanguard Short-Term Bond ETF

iShares 7-10 Year Treasury Bond ETF

iShares iBoxx $ Investment Grade Corporate Bond ETF

iShares Short Treasury Bond ETF

iShares 1-3 Year Treasury Bond ETF

iShares 20+ Year Treasury Bond ETF

Vanguard Intermediate-Term Corporate Bond ETF

Vanguard Short-Term Corporate Bond ETF

Layoffs are rising. Inflation is surging.

News for Vanguard Total International Bond ETF ETF (BNDX)