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) GE Capital and AT&T ( T). The fund has 90 holdings. In addition to some familiar American companies, there are also some familiar foreign companies like UBS ( UBS), GlaxoSmithKline ( GSK) 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.
The sector allocations are diversified with financials at 46% of the fund, industrials at 42% and utilities at 11%. For an equity fund, that would be a lousy mix in terms of diversification, but debt issuance is heaviest in the financial sector. I would also note that the definition of industrial might be a little more liberal given that Glaxo is a drugmaker and AT&T is a telecom company. There are also bonds from Statoil ( STO), a Norwegian oil company. It should be clear that if the currencies perceived to be most at risk for debt downgrades, the euro and the pound, continue to decline against the U.S. dollar, the SPDR Barclays Capital International Corporate Bond ETF will struggle as well. In terms of decentralizing issuer risk, the fund seems like it is well put together. That allows investors who predict the euro is done declining to adjust their portfolios and pick up a little yield as well.