US domiciled ETFs with EUR bond exposure

Discussion in 'Exchange Traded Funds (ETFs)' started by Tastebuds, Jul 11, 2016.

  1. Tastebuds

    Tastebuds Frequent Poster

    I am trying to find US domiciled ETFs that have an exposure to EUR bonds.

    Vanguard only have BNDX (Vanguard Total International Bond) with EUR bond exposure, but the fund is hedged to the USD. Do you know any alternative?

  2. Sarenco

    Sarenco Frequent Poster

    Last edited: Jul 12, 2016
    Hi Tastebuds

    Do you have a good reason for wanting to invest in a US domiciled fund that invests in EUR denominated bonds? I'm not even sure that such a fund exists.

    The yield-to-maturity on a Euro government bond index is around 0.2% at the moment and you will obviously have to pay the fund's TER, trading costs and taxes on dividends at your marginal rate. What's the attraction?
    Last edited: Jul 12, 2016
  3. Tastebuds

    Tastebuds Frequent Poster

    Good question, and I have to admit I am going in circles on this one...
    I have designed a 70 (stock)-30( bonds & bond replacements) portfolio.
    The stock part is clear now, which will be quite diversified but I am struggling a bit with the "safe" part, which should be tied to my home currency (EUR)

    I was thinking of the following options:
    • EUR bonds
    • bond replacements following Burton Markiel recommendations, who states that in eras of financial depression a partial substitution of bonds by other instruments such Corporate Bonds, EM bonds or Dividend funds is advisable.
    I am struggling to find a US domiciled ETF that has exposure to EURO bonds. I thought that BNDX will give me some exposure, but it is hedged to the USD. Also, your comments about low yield +TER + taxes are valid points...

    Among the bond replacements that Markiel suggests, the one i feel more confortable with is VIGI (Vanguard International Dividend Appreciation), which is 21% exposed to EUR. However, if the stock market crashes these bond replacements will also fall, which is not the case with other safer products such "real" bonds...

    That is the summary... thanks for your help!