Algo-Chain’s Top 100 ETFs - #67
In partnership with Inside ETFs Europe, as they prepare for their annual conference held in London on 1st & 2nd October 2018, I will be counting down my top 100 ETFs that should be in every Discretionary Fund Manager's toolbox.
Xtrackers II Global Government Bond UCITS ETF
Ticker: XGSG, Listing Venue: London Stock Exchange, TER: 25bps
Yet another Fixed Income ETF, and yet another one that offers the investor exposure to a global portfolio, which on this occasion is comprised of government bonds. This particular share class of the fund hedges the returns back to GBP.
Firstly, apologies to those of you who have no need to hedge your returns back to Sterling, take heart, as the team at Xtrackers offer a wide choice of hedging options including CHF, USD and EUR. As stated elsewhere, for many Fixed Income ETFs it often makes sense to hedge the currency risk as occasionally those will swamp the returns of the underlying bonds.
This ETF looks to track the FTSE World Government Bond Index, comprising fixed rate debt issued by governments of developed countries, where the Investment Grade bonds are selected from across the whole yield curve, with a minimum maturity date of at least 1 year, going out to 25+ years.
Launched during the height of the Global Financial Crisis in October 2008, this fund would have been an entirely logical product to launch, as at that point in history the idea of a flight to safety in asset selection went to the extreme. Little did we know at the time that the subsequent European Debt Crisis would reset our thinking regarding riskiness of government debt as Greece, Italy & Spain tested the limits.
For a fee of 25bps, this ETF provides the investor with exposure to close to 1,000 bonds across 19 developed markets, with the largest holding of 49% dominated by bonds issued by the US Government and with 22% and 14% issued by the Governments of France and Germany respectively. To date it has amassed over € 1.2bn in assets under management.
Performance wise this investment has been a non-starter for the last two years as the interest rate market contemplated moving away a zero-rates policy in most developed economies. The impact of a Central Bank led ‘Quantitative Easing’ strategy can clearly be seen in the returns charts. Bearing in mind that at the time of writing the duration of the portfolio is close to 8 years, getting the timing wrong will cost the investor.
Access the online analytics for this ETF www.algo-chain.com/top100etfs/XGSG_LN.aspx
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All data and analytics provided by ETF Info & Algo-Chain