What BNDX actually is

BNDX is a bond fund that holds investment-grade bonds issued outside the United States: government debt and corporate bonds from Europe, Japan, Canada and other developed countries. It is designed to complement a US bond fund.

What is inside

Thousands of bonds across many countries and issuers. The fund hedges its currency exposure back to US dollars, so changes in exchange rates have a smaller effect on what you earn.

Distributions

BNDX pays monthly. The income comes from the interest on its bonds, and the cost of the currency hedge reduces the net yield. The amount can change from month to month.

What to keep in mind

  • Interest-rate risk. Bond prices fall when rates rise.
  • Hedging cost. It can reduce the yield, and even turn positive or negative with interest-rate gaps between countries.
  • Credit and country risk. Governments and companies can run into trouble.
  • Low growth. Bond funds are for income and stability, not growth.

Quick take

BNDX adds international diversification to a bond allocation, with currency effects mostly removed.