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Vanguard Global ex-U.S. Aggregate Bond Index ETF (CAD hedged) - VBG

ETF Overview

The fund seeks to track, to the extent reasonably possible and before fees and expenses, the performance of a broad global bond index, which Index is hedged to the Canadian dollar.

Currently, this Vanguard ETF seeks to track the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (CAD hedged) (or any successor thereto).

It invests directly or indirectly primarily in a wide spectrum of the global investment-grade, fixed rate, fixed income markets outside the U.S. and uses derivative instruments to seek to hedge the foreign currency exposure of the securities included in the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index to the Canadian dollar.

Invests primarily in the U.S.-domiciled:

Additional Index Information

The Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (CAD hedged) is a market capitalization-weighted index that represents a wide spectrum of the global investment-grade, fixed rate, and fixed income markets outside the U.S. - all with maturities of more than one year-with the foreign currency exposure of the securities included in the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index hedged to the Canadian dollar.

Key ETF Data

Fundamentals
Category (main) Global ex-US Fixed Income - Government & Corporate (investment grade)
Underlying Index Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (CAD hedged)
ETF Structure Passive type. Endeavours to return the Index return before fees/costs
Asset Class Fixed Income - Government & Corporate (investment grade)
Region Global ex-US
Issuer Vanguard Investments Canada
ETF Home Page Available here
Fund Facts
Inception Date June 30, 2014
Total Holdings 3,323
Distribution Frequency Monthly
Leverage None
Significant Currency Exposure Yes
Currency Hedging Yes
Fees
Management Fee 0.35%
Management Expense Ratio (MER) 0.35% *

* 2015

Trading Information
Ticker VBG
Exchange TSX (Toronto Stock Exchange)
Currency CAD
Eligibility
Eligibility * RRSP, RRIF, RESP, TFSA, DPSP, RDSP
DRIP available ** Yes
PACC Plan available ** No
SWP available ** No

* Always check eligibility with your plan operator as plans and accounts can differ

** Not all brokers can facilitate these plans. Check with your broker.

Current Price, Fund Performance, Yield, NAV, Charts etc

To view the TSX or Morningstar fund page for this ETF click on the Fund Data menu tab or below:

ETF at TMX ETF at Morningstar

ETF Analysis

Bonds/fixed income funds should be an important component in most investment portfolios. The general rule of thumb is that you should have the percentage equivalent in bonds as per your age. So if you are 30, your portfolio should comprise 30% bonds/fixed income funds.

However the bond markets are in near unprecedented territory. Years of central bank stimulus packages and ultra-low interest rates since 2008's Financial crisis have created a massive bubble.

Many analysts including Peter Boockvar, managing director and chief market analyst at The Lindsey Group, agree. He stated in July 2016 that the bond market is in an ‘epic bubble of colossal proportions’.

Until the buddle bursts, we cannot recommend buying bonds/fixed income funds.

If you absolutely have to buy bonds/fixed income funds then ensure you always check the Yield To Maturity (YTM), also known as the Weighted Average Yield To Maturity.

The YTM is much more important than the bond's current yield (also called the current distribution yield).

The YTM (unlike current yield) considers not only the coupon income, but any capital gain or loss that an investor will realize by holding the bonds to maturity. It also considers reinvestment of the coupons.

Unfortunately the frothy bond market has meant many fixed income ETFs have had to purchase many bonds at a premium. An ultra-low rate environment and purchasing bonds at a premium makes for a particularly terrible climate for income seekers, and new fixed income investors.

Protect yourself by understanding YTM and checking the YTM of any fixed income security you are considering purchasing. Also understand quality ratings, duration and maturities.

Be particularly aware of fund fees. What is the fund's MER ()? An MER of 0.40% may not sound like much but fixed income funds are supposed to be less risky than equities (bond market bubbles such as the current one excepted) so their returns are typically considerably less. Consequently an MER of 0.40% may actually be a significant portion of any investment return from a bond/fixed income fund. Bond ETFs with sub 0.20% MERs are available.