Investment Product and Service Launches

Vanguard creates World Bond ETF, and Barrow Hanley introduces bank loan investment strategy.

Vanguard has filed a preliminary registration statement with the Securities and Exchange Commission (SEC) for the Vanguard Total World Bond exchange-traded fund (ETF).

Vanguard says the ETF will be the industry’s first U.S.-domiciled index product offering investors access to the entire global investment-grade bond universe in a single portfolio. It is expected to launch in the third quarter of this year.

The fund will be structured as an ETF of ETFs, investing directly in two existing low-cost ETFs: Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX). This structure enables the Vanguard Total World Bond ETF to achieve immediate scale by using existing exposure from the underlying ETFs and is expected to result in tighter bid/ask spreads and lower operating expenses than investing directly in the benchmark’s constituents. The approach is similar to Vanguard Total Corporate Bond ETF (VTC), which launched in November, 2017, and invests in Vanguard’s existing short-, intermediate-, and long-term corporate bond ETFs.

“With the Total World Bond ETF, Vanguard will be the first firm to offer U.S. investors a single index product with exposure to the entire global investment-grade bond universe,” says Vanguard Chief Investment Officer Greg Davis. “It will be simple, convenient, and highly diversified, with an expense ratio in line with our current low-cost fixed income ETFs.”

The new ETF seeks to track the Bloomberg Barclays Global Aggregate Float Adjusted Composite Index and will have an estimated expense ratio of 0.09%.


Barrow Hanley Introduces Bank Loan Investment Strategy 

Barrow, Hanley, Mewhinney & Strauss, LLC, announced that the firm will be launching a bank loan strategy, effective this June. In conjunction with the initiation of this new strategy, the firm has also added two senior investment professionals to its fixed income team who will manage the firm’s below investment grade offerings, including this new strategy.

The bank loan strategy is expected to expand, complement and strengthen the firm’s existing fixed income strategies, and will share a similar investment philosophy and process that has been the hallmark of Barrow Hanley for more than three decades—one designed to produce superior returns with lower volatility.

The bank loan strategy will be co-managed by Nick Losey and Chet Paipanandiker (Pai), who bring nearly 40 years of combined experience to Barrow Hanley. They have invested together for almost 15 years and have expertise in high-yield bonds, bank loans, structured products, credit default swaps (CDS) and equities. Losey and Pai recently joined Barrow Hanley and will both report to Mark Luchsinger and Scott McDonald, the co-heads of Fixed Income at Barrow Hanley. Losey and Pai will join Erik Olson and Mark Luchsinger in co-managing the high yield fund launched in 2002.

Most recently, Losey and Pai were portfolio managers at Whitebox Advisors, where they were recruited to help launch a collateralized loan obligation platform and generate investment ideas for the firm’s hedge funds. Previously, the two were founding members of a team that launched an event-driven hedge fund. The pair got their start together at Highland Capital Management investing in bank loans, high-yield bonds and equities.