This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

European Bond ETF Targets Volatile Currencies

NEW YORK ( TheStreet) -- In the exchange-traded fund industry, there has been far more attention paid to stock fund themes than specialized bond funds. That's slowly changing.

State Street (STT) recently launched the SPDR Barclays Capital International Corporate Bond ETF (IBND). There are already several foreign government bond ETFs, but now investors have access to corporate bonds as well. PowerShares will also list a foreign corporate bond ETF.

With many sovereign nations on shaky ground, the sovereign bond market has experienced unusually high volatility. For the time being, corporate bonds from these countries might be less volatile, though not less risky, which would be a positive for this fund.

On the negative side, there are a lot of bonds that are denominated in euros and British pounds, so the fund offers exposure to currencies that are even uglier than the U.S. dollar. This is important because one reason to buy foreign bonds is to get exposure to currencies healthier than your own.

The largest country weightings are the U.S. with 18%, Germany with 16%, the U.K. with 12%, France with 11%, Italy with 8%, the Netherlands with 7% and Spain with 6%. The U.S. is the largest country weighting because the index that underlies the ETF includes bonds from U.S. companies denominated in other currencies, often in euros. As you look over the holdings, you will see American companies like General Electric's (GE - Get Report) GE Capital and AT&T (T - Get Report).

The fund has 90 holdings. In addition to some familiar American companies, there are also some familiar foreign companies like UBS (UBS), GlaxoSmithKline (GSK - Get Report) and Veolia Environnement (VE). Most of the holdings have a 1% to 2% allocation. The average maturity is 5.5 years, the modified adjusted duration is 4.6 years, the yield to worst (meaning least favorable condition for bonds to be called) is 3.05% and the expense ratio will be 0.55%.

The quality breakdown favors A-rated debt at 49% of the fund, Aa at 33% and Baa at 13%. In terms of maturities, 33% of the fund's bonds have three- to five-year maturities, 28% have one to three years, 16% have five to seven years and 11% have seven to 10 years.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
VE $18.06 1.48%
GSK $47.02 0.00%
GE $24.86 0.00%
IBND $31.33 0.00%
STO $17.89 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs