Connect with us

Economics

Vanguard introduces euro-hedged share classes for trio of fixed income ETFs

Vanguard has introduced new currency-hedged share classes for three fixed income ETFs that deliver core access to Treasury, gilt, and US dollar corporate bond markets.
The post Vanguard introduces euro-hedged share classes for trio of fixed income ETFs first appeared on ETF Strategy.

Share this article:

Published

on

This article was originally published by ETF Strategy

Vanguard has introduced euro-hedged share classes for three fixed income ETFs that deliver core access to Treasury, gilt, and USD corporate bond markets.

Vanguard has launched three currency-hedged ETF share classes on Deutsche Börse Xetra.

The funds track broad-maturity indices from Bloomberg Barclays via physical replication using a sample-based approach.

Income is accumulated within the portfolios.

The new share classes have been listed on Deutsche Börse’s Xetra platform and provide investors with tools to mitigate the foreign-exchange exposure of underlying dollar- or sterling-denominated securities relative to the euro.

A growing number of investors have sought to incorporate currency hedging strategies into their portfolios this year owing to heightened levels of volatility between major currency pairs – a function of the uncertain economic backdrop caused by the Covid-19 pandemic.

The rolling one-year volatility between the euro and the dollar is up from 4.4% at the start of the year to 7.3% (as of 8 September), while the rolling one-year volatility between the euro and pound sterling has climbed from 7.9% to 9.7% over the same period.

The funds

The Vanguard USD Treasury Bond UCITS ETF EUR Hedged – Acc (VDTE GY) tracks the Bloomberg Barclays Global Aggregate US Treasury Float Adjusted Index.

The index consists of fixed-rate, US dollar-denominated securities issued by the US government. Eligible bonds must have a maturity greater than one year and a minimum issue size of $300 million. The yield on the index is 0.4%, while its average duration is 7.1 years. The new share class comes with an expense ratio of 0.12%, while the non-hedged share class costs 0.07%. The fund houses €526m.

The Vanguard UK Gilt UCITS ETF EUR Hedged – Acc (VGUE GY) tracks the Bloomberg Barclays Sterling Gilt Float Adjusted Index.

The index consists of fixed-rate, sterling-denominated securities issued by the UK government. Eligible bonds must have a maturity greater than one year and a minimum issue size of £200m. The yield on the index is 0.3%, while its average duration is 14.4 years. The new share class also comes with an expense ratio of 0.12%, while the unhedged share class costs 0.07. The fund houses €225m.

The Vanguard USD Corporate Bond UCITS ETF EUR hedged – Acc (VDCE GY) tracks the Bloomberg Barclays Global Aggregate Corporate USD Index.

The index consists of fixed-rate, US dollar-denominated securities issued by corporate entities globally. Eligible bonds must have a maturity greater than one year and a minimum issue size of $250m. The yield on the index is 1.9%, while its average duration is 8.2 years. The new share class comes with an expense ratio of 0.14%, while the unhedged class costs 0.09%. The fund houses $524m.

The post Vanguard introduces euro-hedged share classes for trio of fixed income ETFs first appeared on ETF Strategy.

Share this article:

Economics

De-Dollarization Accelerates, Launching Gold and Bitcoin Higher into a Massive Bull Cycle for Hard Money

It has been an interesting few weeks with U.S. banks collapsing and the Fed stepping in to rescue what would have likely been a contagion run on the banks…

Share this article:

Continue Reading
Economics

Mooners and Shakers: Bitcoin back above $28k as altcoins Kaspa, Conflux and Algorand surge

Bitcoin has bounced back strongly above US$28k over the past 24 hours, while more than a few altcoins have taken … Read More
The post Mooners and Shakers:…

Share this article:

Continue Reading
Economics

The SVB Collapse Caused Major Turbulence In Traditional Banking – Is FinTech Here to the Rescue?

The recent collapse of the Silicon Valley Bank has unraveled endless horror stories for the financial industry. The traditional banking sector felt the…

Share this article:

Continue Reading

Trending