BNDW tracks a global bond index and allocates weight between the US market and international markets according to market capitalization. Through a currency hedging strategy, it minimizes the risk of fluctuations in other currencies against the US dollar, so that investors can focus on the core interest income of bonds.

It is well suited to long-term asset allocation investors who want to diversify across investment-grade bonds worldwide in a single product, without building a complicated bond portfolio.

Launched by Vanguard in 2018, it is a passively managed (index-tracking) ETF.

It holds Vanguard's two flagship bond ETFs, BND and BNDX, in proportion to their market capitalization weights. This gives indirect exposure to tens of thousands of bonds worldwide, including Treasuries, government agency bonds, corporate bonds and mortgage-backed securities, and the fund rebalances monthly to manage any gap versus the index.

• A global bond portfolio through a single ticker
• Currency volatility management through hedging

Assets under management (AUM) stand at $1.9B, and the expense ratio is 0.05% per year.

There is no need to buy BND, which focuses only on US bonds, or BNDX, which holds only international bonds, separately. You can get a balanced allocation across both markets at once.

Global bond prices tend to move in sync with the global rate-hike cycle and inflation trends. The direction of monetary policy at major central banks is a key variable for returns.

The product draws steady inflows from global asset allocation funds and individual investors looking for a stable core holding. Demand is strong from those seeking global diversification as an alternative to the volatile stock market.

Broad diversification across the global bond market and a low expense ratio are its strengths, but the risk of price declines during periods of rising interest rates cannot be avoided.

BNDX, shown in the table, is an international bond product and one of the components of BNDW, while IUSB covers a broader range of bonds within the US market. BINC, PYLD and JCPB differ in that they actively adjust sector allocations in pursuit of excess returns. By comparison, BNDW offers standard, passive global bond exposure. Other alternatives worth considering include BND, which focuses only on US bonds, and BlackRock's similar product AGG. If you want a higher allocation to emerging market bonds, VWOB is also worth a look.

BNDW can serve as a core pillar of global asset allocation. Before investing, use the following checklist to review its role within your portfolio.

Even investment-grade bonds, which are classified as safe assets, can suffer sharp short-term price declines during a market-wide credit crunch or a period of simultaneous rate hikes, so investors should keep this in mind.

It is a core ETF that offers affordable and convenient access to the beta returns of the global bond market. It is a recommended choice for investors who want to lower the volatility of an equity-heavy portfolio and build up stable interest income.