Tag Archives: global bonds

Your fixed-income portfolio can go one-ticket with new Vanguard global bond ETF

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By Dale Roberts, Cutthecrapinvesting

Special to the Financial Independence Hub

Vanguard recently launched the world of bonds within one ETF. The Vanguard global bond ETF ticker VGAB combines the US bond market with the global bond market. It’s a one ticket offering. You can enter that one ticker symbol and gain access to over 15,000 bonds from Canada and the US, from Europe and through Asia. The fund includes modest exposure to developing market bonds as well.

Here’s the overview in 4 simple benefits.

The key benefits or strategy here is more ‘complete’ global diversification, investment grade quality and currency hedging. The fees are very reasonable for a Global fund at .30%.

If you want to look under the hood at the individual index ETFs, here are the links.

Vanguard US Aggregate Bond ETF (CAD hedged).

Vanguard Global Bond ETF (CAD hedged).

This slide details the benefits of currency hedging with respect to volatility.

All said, for the investor it is about the volatility and risk management for the total portfolio. We’re looking for lesser correlation to Canadian, US and International stocks. That can be achieved by way of removing the Canadian home bias with respect to bond exposure. US bonds, Canadian bonds, developing market bonds and developed market bonds will each bring unique characteristics to the table.

Our friends at ModernAdvisor will suggest that developing market bonds offer greater diversification for the Canadian investor. Those bonds are in the mix, but once again, in modest fashion.

Here’s the bond holding overview:

The geographic allocation of VGAB.

We can see that it is dominated by developing markets. Within VGAB we will see developing market bond exposure of … Continue Reading…

Do global bond yields matter any more?

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U.S. 10-Year vs. 10-Year German Bund

By Kevin Flanagan, WisdomTree Investments

Special to the Financial Independence Hub

Do global bond yields matter anymore? Following the results of Election Day and the subsequent response in the U.S. bond market, this was certainly a valid question. Indeed, with U.S. Treasury (UST) yields ascending rather visibly, a key investment force (relative yield advantage vs. the rest of the G7 universe) that had helped keep UST yields in check, if not push them even lower, seemed to fall off the fixed-income radar.

With the first quarter of 2017 now in the books, and the markets almost five months removed from the U.S. election, we thought it would be useful to provide some insight as to where the UST 10-Year yield resides now, and consider whether the relative yield advantage still exists.

While it has not always been a one-way street to the upside, G7 10-year yields have all risen to varying degrees, with the one notable exception being the UK, where gilts have actually seen a decline of 6 basis points (bps) since November 7. Italian 10-year yields fall on the other end of the spectrum, as the 10-year has experienced an increase of 61 bps, while the gain in France has been pegged at 50 bps. To put this in some additional perspective, the rise in the UST 10-Year was +56 bps. Rounding out the 10-year yield tallies: Canada +41 bps; Germany +18 bps and Japan +12 bps.

It should also be noted that the experience thus far in 2017 seems to have been a bit more country/region specific and not just the kind of broader move in global rates that investors have witnessed before. To be sure, here in the U.S., Treasury yields have been responding to developments in Washington D.C., such as the Fed pushing up its first rate hike three months earlier than expected and continued political headlines in the first few months of the Trump administration.

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