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There’s A New King Of Long-Term Bond Funds

Monday, November 28, 2016 9:33
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As interest rates surge in the United States, an international-focused long-term bond fund has now taken over top billing in terms of assets under management.

The immense selling pressure that has been present in the Long Term Treasury Bond space since the U.S. election results has finally affected TLT (iShares 20+ Year Treasury Bond, Expense Ratio 0.15%, $5.6 billion in AUM). The TLT has seen about $400 million vacate year-to-date thanks to a recent round of redemptions.

This recent spate has actually knocked TLT, which debuted back in 2002, out of the top spot in terms of assets under management in the “Long Term Bond” category.

An internationally focused fund from Vanguard, BNDX (Vanguard Total International Bond, Expense Ratio 0.20%), has had a stellar year thus far in terms of raising assets (over $1.38 billion in year-to-date), bringing its total asset base ahead of TLT at north of $5.8 billion.

Like most longer-dated bond funds, BNDX has taken it on the chin performance wise since the U.S. Presidential election results, presumably on expectations that interest rates will be increased by the FOMC in the very near term and perhaps beyond, and BNDX has traded very heavy volume on several occasions since mid-November. When we look at top individual bond holdings within BNDX (there are 4,083 single bonds inside of the portfolio), we see government exposures to Germany and Japan throughout the top ten holdings, with one instance of U.K. bond exposure.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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