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In a world of depressed or low interest rates combined with a debt crisis, it might be hard to imagine investors would be interested in bonds from this sector. That said, an overseas investor might, from their view, see the U.S. Treasury bond market in the same manner-low interest rates, credit downgrades, enormous debt and funding requirements or supply.

Strangely or not investors, especially institutional investors, have their investment guidelines and mandates which include bonds from a variety of sources and sectors. While the situation in the eurozone may seem off-putting, investors still forge ahead with their investments at least for now. Another reason why investors seem confident in their investing is that most central banks are in full bailout mode and are propping markets as best they can with various QE (Quantitative Easing) strategies or plain old fashioned money printing. This is why many investors pair their bond holdings with gold but that's another subject for another day.

In this review we'll post the most popular or most interesting issues in the category we can find. Rankings are more difficult and subjective especially given the newness and unique issues available as we descend from high AUM (Assets under Management) to newer issues still finding their way to gaining attention.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Naturally some issues don't have enough data to make monthly views meaningful.

In this case we view weekly charts with 22 period moving average guidelines. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.


#10: PIMCO Australia Bond Index ETF (AUD)

AUD follows the BofA Merrill Lynch Diversified Australia Bond Index which tracks the performance of large, Australian dollar-denominated investment grade debt instruments publicly issued in the Australian domestic market, including sovereign, quasi-government, corporate, securitized and collateralized securities.

The fund was launched in November 2011. The expense ratio is 0.45%. AUM equal $23M and average daily trading volume is 3.7K shares. As of May 2012 the annual dividend yield is 0.57% and YTD return 0.56%.

Data as of May 2012

AUD Top Ten Holdings & Weightings

  1. Queensland Treasury Corp: 7.45%
  2. Intl Finance Corp: 6.98%
  3. New S Wales Treasury Crp: 5.04%
  4. New S Wales Treasury Crp Loc Gov Gtd 16: 4.82%
  5. Kfw Gov Gtd Mtn: 4.72%
  6. Inter-American Devel Bk: 4.62%
  7. Treasury Corp Victoria Gov Gtd: 4.32%
  8. Queensland Treasury Corp: 3.43%
  9. Australian Govt Bd 415: 3.42%
  10. Hsbc Bank Plc: 3.28%

#9: Wisdom Tree Australia/New Zealand Bond ETF (NYSEARCA:AUNZ)

AUNZ is not linked to a specific benchmark and would likely be considered a more active ETF. From the sponsor website is this description: WisdomTree Australia & New Zealand Debt Fund seeks a high level of total returns consisting of both income and capital appreciation. The Fund attempts to achieve its investment objective through investment in debt securities denominated in Australian or New Zealand Dollars. The fund was launched in June 2008 first as BNZ (New Zealand Dollar ETF) but changed in October 2011 as this reconstituted ETF.

The expense ratio is 0.45%. AUM equal $39.6 and average daily trading volume is 21.8K shares. As of May 4, 2012 the annual dividend yield is 1.13% and YTD return 2.00%. The most recent 1 YR return which presumably includes BNZ data was -7.18%. AUNZ trades commission free at E*Trade.

Data as of May 2012

AUNZ Top Ten Holdings

  • Australia(Cmnwlth) 5.5%: 5.35%
  • Australia(Cmnwlth) 4.25%: 5.26%
  • New Zealand(Govt) 6%: 3.82%
  • Sth Aust Govt Fin 5.75%: 3.14%
  • Tsy Corp Victoria 5.75%: 2.86%
  • Australia(Cmnwlth) 5.25%: 2.67%
  • Inter-American Dev Bk Iadb: 2.65%
  • Australia(Cmnwlth) 5.75%: 2.62%
  • Australia(Cmnwlth) 5.5%: 2.60%
  • Euro Inv Bk 5.375%: 2.56%

#8: Invesco PowerShares German Bund Futures ETF (BUNL)

BUNL follows the DB USD Bund Futures Index which is intended to measure the performance of a long position in Euro-Bund Futures. The underlying assets of Euro-Bund Futures are Federal Republic of Germany government issued debt securities (Bunds) with a remaining term to maturity of not less than 8 years and 6 months and not more than 10 years and 6 months as of the futures contract delivery date. The fund was launched in March 2011.

The expense ratio is 0.50%. AUM equal $32 million and average daily trading volume is 13K shares. As of May 4, 2012 there isn't an annual dividend available and YTD return was 3.09%. The 1 YR return was 16.89%.

As of May 2012, Holdings data for the German Bund Futures contracts is not available.

#7: iShares 1-3 Year International Treasury Bond ETF (NASDAQ:ISHG)

ISHG follows the S&P/Citigroup International Treasury Bond Index ex-U.S. 1-3 Year which is designed to measure the performance of treasury bonds issued in local currencies by developed market countries outside the U.S. with a maturity of 1-3 years. The fund was launched in January 2009. The expense ratio is 0.35%.

AUM equal $184.9M and average daily trading volume is 10.4K shares. As of May 4, 2012 the annual dividend yield was 4.08% and YTD return 1.76%. The 1YR return was -6.41%.

Data as of May 2012

ISHG Top Ten Holdings & Weightings

  • Japan (2 Year Issue) Sr Unsecured 08/13 0.2: 5.19%
  • Japan (2 Year Issue) Sr Unsecured 10/13 0.1: 5.19%
  • Japan 27(20 Year Issue) Sr Unsecured 09/14 5.: 4.05%
  • Japan(Govt Of) 0.6%: 2.75%
  • United Kingdom (Government Of): 2.65%
  • Bundesrepub. Deutschland Bonds 07/14 4.25: 2.45%
  • Ireland(Rep Of) 4%: 2.32%
  • Japan 260(10 Year Issue) Sr Unsecured 06/14 1.6: 2.28%
  • Denmark(Kingdom) 5%: 2.23%
  • Netherlands (Kingdom of) 4.25%: 2.22%

#6: iShares International Inflation-Linked Bond ETF (NYSEARCA:ITIP)

ITIP follows the BofA Merrill Lynch Global ex-US Diversified Inflation-Linked Index and is a broad, market value weighted, capped total return index designed to measure the performance of inflation-linked sovereign debt that is publicly issued and denominated in the issuer. The fund was launched in May 2011.

AUM equal $62.8million and average daily trading volume is less than 13K shares. As of May 4, 2012 the annual dividend yield was 2.00% and YTD was 6.06%. The 26 week return was 2.54%.

Data as of May 2012

ITIP Top Ten Holdings Weightings

  • Nota Do Tesouro Nacional Bonds 05/13 6.: 3.75%
  • France(Govt Of) 1.07943%: 2.73%
  • Poland(Rep Of) 3.52047%: 2.52%
  • France (Govt Of) Bonds 07/22 1.1: 2.28%
  • Canada Govt 4.25%: 2.28%
  • Nota Do Tesouro Nacional Notes 05/45 6.: 2.23%
  • Nota Do Tesouro Nacional Bonds 08/20 6.: 2.23%
  • Germany (Federal Republic Of) 1.5%: 2.22%
  • Australia(Cmnwlth) 4%: 2.11%
  • United Kingdom (Government Of) 1.46371%: 2.04%

#5: SPDR DB International Government Inflation Protected Bond ETF (NYSEARCA:WIP)

WIP follows the DB Global Government ex-US Inflation-Linked Bond Capped Index measures the total return performance of inflation-linked government bonds from developed and emerging market countries outside of the United States.

The fund was launched in March 2008. AUM equal $1.317 M and average daily trading volume is 192K shares. As of May 4, 2012 the annual dividend yield was 4.36% and YTD return 6.29%. The 1 YR return was 1.46%. WIP trades commission free at TD Ameritrade.

Data as of May 2012

WIP Top Ten Holdings & Weightings

  • Japan(Govt Of) 1.0857%: 4.84%
  • France(Govt Of) 2.56835%: 4.57%
  • United Kingdom (Government Of) 1.44962%: 3.82%
  • United Kingdom (Government Of) 2.05188%: 3.49%
  • France(Govt Of) 1.07943%: 3.31%
  • Poland(Rep Of) 3.52047%: 2.80%
  • Korea(Republic Of) 2.75%: 2.77%
  • Turkey(Rep Of) 9.86678%: 2.76%
  • France(Govt Of) 1.78968%: 2.68%
  • United Kingdom (Government Of) 6.827%: 2.61%

#4: Van Eck Emerging Markets Local Currency ETF (NYSEARCA:EMLC)

EMLC follows the J.P. Morgan Government Bond Index Emerging Markets Global Core Index which tracks a basket of bonds issued in local currency by emerging market governments. The fund was launched in July 2010. The expense ratio is 0.49%. AUM equal $745.5M and average daily trading volume is 290K shares.

As of May 2012 the annual dividend yield was 4.98% and YTD return 8.81%. The one year return was 1.71%.

Data as of May 2012

EMLC Top Ten Holdings

  • Chile Rep 5.5%: 3.02%
  • Transnet Soc 10.8%: 2.67%
  • Rushydro Fin L 7.875%: 2.55%
  • Eskom Hldgs Ltd, South Africa 9.25%: 2.21%
  • Malaysia 4.378%: 2.03%
  • Colombia Rep Euro Mtn Be Regs 12%: 1.88%
  • Poland(Rep Of) 5.5%: 1.83%
  • Philippines Rep 6.25%: 1.82%
  • Banco Do Brasil Sa Mtn Be Regs 9.75%: 1.74%
  • Intl Bk Recon&Dv 6.5%: 1.65%

#3: iShares S&P Citigroup International Treasury ETF (NASDAQ:IGOV)

IGOV follows the S&P Citigroup International Treasury Bond Index ex-U.S. which includes Treasury bonds issued in local currencies. The fund was launched January 2009. The expense ratio is 0.35%. AUM equal $310M and average daily trading volume is 22K shares.

As of May 4, 2012 the annual dividend yield was 3.44% and YTD return 0.64%. The 1 YR return was -2.69%. More disappointing results were due to more exposure to the eurozone than BWX for example.

Data as of May 3, 2012

IGOV Top Ten Holdings & Weightings

  • Japan(Govt Of) 1.5%: 4.24%
  • Japan(Govt Of) 2.2%: 4.05%
  • Japan(Govt Of) 1.5%: 3.29%
  • Germany (Federal Republic Of) 4.25%: 2.69%
  • Netherlands (Kingdom of) 3.75%: 2.41%
  • Belgium(Kingdom) 3.25%: 2.14%
  • Austria(Rep Of) 3.4%: 2.08%
  • Japan (2 Year Issue) Sr Unsecured 10/13 0.1: 2.03%
  • Netherlands (Kingdom of) 2.75%: 1.54%
  • Belgium(Kingdom) 5.5%: 1.53%

#2: SPDR Short-Term International Treasury ETF (NYSEARCA:BWZ)

BWZ follows the Barclays Capital 1-3 Year Global Treasury Ex-US Capped Index which includes government bonds issued by investment-grade countries outside the United States, in local currencies, that have a remaining maturity of one to three years and are rated investment grade. The fund was launched in January 2009.

AUM equal $252 million and average daily trading volume is 29K shares. As of May 4, 2012 the annual dividend yield was 3.44% and YTD return 2.61%. The 1 YR return was -4.27%.

Data as of May 2012

BWZ Top Ten Holdings & Weightings

  • Uk Tsy 2 3/4 2015 Bonds 01/15 2.75: 3.28%
  • Japan(Govt Of) 1.5%: 2.29%
  • Japan 85 (5 Year Issue) Sr Unsecured 09/14 0.7: 2.07%
  • United Kingdom (Government Of) 2.25%: 2.00%
  • Japan(Govt Of) 1%: 1.93%
  • Japan (2 Year Issue) Sr Unsecured 08/13 0.2: 1.89%
  • Japan 84 (5 Year Issue) Sr Unsecured 06/14 0.7: 1.89%
  • Japan(Govt Of) 0.5%: 1.85%
  • France(Govt Of) 2.5%: 1.81%

#1: SPDR International Treasury Bond ETF (NYSEARCA:BWX)

BWX follows the Barclays Capital Global Treasury Ex-US Capped Index which includes government bonds issued by investment-grade countries outside the United States, in local currencies, that have a remaining maturity of one year or more and are rated investment grade. The fund was launched in October 2007. The expense ratio is 0.50%.

AUM equal $1.806M and average daily trading volume is 206K shares. As of May 4, 2012 the annual dividend yield was 3.35% and YTD return 2.12%. The 1 YR return was 0.16%. BWX trades commission free at TD Ameritrade.

Data as of May 3, 2012

BWX Top Ten Holdings & Weightings

  • Japan(Govt Of) 1.5%: 1.97%
  • Japan(Govt Of) 2.3%: 1.73%
  • Japan(Govt Of) 2.9%: 0.92%
  • Japan(Govt Of) 2.6%: 0.87%
  • Denmark(Kingdom) 4.5%: 0.84%
  • Netherlands (Kingdom of) 3.25%: 0.70%
  • Uk Tsy 4 1/2 2034 Bonds 09/34 4.5: 0.66%
  • Japan(Govt Of) 1.7%: 0.65%
  • Japan(Govt Of) 1.4%: 0.63%
  • Denmark(Kingdom) 4%: 0.61%

We rank the top 10 ETF by our proprietary stars system as outlined below. However, given that we're sorting these by both short and intermediate issues we have split the rankings as we move from one classification to another.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

This is a sector that should gain investor attention now and in the future. The eurozone dominates headlines with debt problems causing more volatility in the sector in the near to intermediate term. Meanwhile new entrants like EMLC, AUNZ and AUD will capture more attention given more attractive yields and fewer headline issues like we see from the eurozone. Some of the latter need more seasoning from a technical view but then longer index data is available for analysis but not from the charts we have available for posting at this time.

It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from


Disclosure: The ETF Digest maintains positions for Lazy and Active portfolios in BWX and EMLC.

(Source for data is from ETF sponsors and various ETF data providers)

Source: Top 10 Global Government Bond ETFs