Vanguard launches USD high-yield bond ETF in Europe

Vanguard has launched the Vanguard USD High Yield Corporate Bond UCITS ETF for European investors seeking exposure to US dollar-denominated corporate bonds rated below investment grade. The fund tracks the Bloomberg US High Yield $250MM 2% Issuer Capped Index and has an ongoing charges figure of 0.15%.

The index includes bonds with at least $250 million outstanding and caps each issuer’s weight at 2%, according to Vanguard.

The ETF will be listed on the London Stock Exchange, Deutsche Börse, Borsa Italiana, SIX Swiss Exchange and Euronext Amsterdam. It will offer accumulating and distributing share classes. Listings will be available in US dollars, euros and Swiss francs, depending on the exchange.

Vanguard described the fund’s 0.15% charge as the lowest among funds in the applicable European-domiciled UCITS USD high-yield bond peer group. The ETF expands the firm’s range of fixed-income UCITS products.

“The USD high yield market is the largest segment of the global high yield corporate bond market and an important building block in a comprehensive fixed income offering,” Claire Aley, Vanguard’s head of Product and PRD Europe, said.

Aley added that the ETF is intended to give investors access to income from the market, help manage duration risk and broaden portfolio diversification. High-yield bonds generally offer higher yields than investment-grade debt, while carrying greater credit risk because they are issued by companies with lower credit ratings.