WisdomTree launches yield-enhanced global agg ETF

Dec 14th, 2018 | By | Category: Fixed Income

WisdomTree has expanded its range of yield-enhanced fixed income ETFs with the launch of the WisdomTree Yield Enhanced Global Aggregate Bond Fund (GLBY US) on NYSE Arca.

WisdomTree launches yield-enhanced global aggregate bond ETF

The fund seeks to provide a superior yield compared to the Bloomberg Barclays Global Aggregate Index while limiting tracking error and risk.

The fund seeks to provide a superior yield compared to standard core global aggregate benchmarks while limiting tracking error and risk. It includes exposure to Treasury, government-related, corporate, and securitized fixed-rate bonds from both developed and emerging markets issuers

The ETF is linked to the Bloomberg Barclays Global Aggregate Enhanced Yield Index which deconstructs the parent Bloomberg Barclays Global Aggregate Index – a flagship measure of global investment grade debt from twenty-four local currency markets – into distinctive maturity and sector buckets for each of the major currency exposures.

The yield-enhanced methodology re-weights these buckets within each currency block to enhance yield while adhering to risk constraints on tracking error, sector exposure, and duration. Bond cash flows denominated in foreign currencies are hedged back to US dollars.

According to WisdomTree, this process results in a more even balance between corporate and government debt exposures globally, as well as an enhanced trade-off between yield potential and interest rate risks, compared to the market cap-weighted parent index.

“GLBY provides investors a simple and cost-effective way to access multiple economies, interest rates and yield curves with the prospect of higher return potential and lower absolute risk than domestic bond markets alone,” said Rick Harper, WisdomTree Head of Fixed Income. “This fund is ideal for investors looking to enhance yield or seeking diversification through global fixed income.”

GLBY comes with an expense ratio of 0.20%.

The other funds within WisdomTree’s yield-enhanced fixed income offering include the $380 million WisdomTree Yield Enhanced US Aggregate Bond Fund (AGGY US) and $40m WisdomTree Yield Enhanced US Short-Term Aggregate Bond Fund (SHAG US). AGGY and SHAG utilize a similar methodology to GLBY but target the broad US aggregate and short-term US aggregate bond universes respectively.

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