This bond ETF tracks the Bloomberg Global Aggregate ex-USD Hedged Index. It holds investment-grade bonds issued outside the US, and uses currency futures and similar instruments to bring currency exposure back to the US dollar, reducing the impact of exchange-rate swings.

It suits investors who want to add regional diversification to a portfolio weighted toward US bonds, as well as long-term investors who want exposure to overseas interest rates while avoiding currency fluctuations.

It is a passively managed (index-tracking) ETF run by Nuveen.

Under normal conditions, the fund invests most of its net assets in the bonds that make up the index. It holds government bonds, government-related bonds, corporate bonds and securitized bonds from developed and emerging markets, includes only bonds with sufficient remaining maturity, and targets bonds issued in currencies other than the US dollar. Currency exposure is adjusted monthly through currency forward contracts.

• Holds only non-US bonds, lowering dependence on US interest rates
• Currency hedging reduces the effect of exchange-rate moves on returns
• Low turnover keeps trading costs limited

Assets under management (AUM) are $4.0B, and the expense ratio is 0.08% per year.

Even within the same bond category, fees and liquidity differ, and as a newer product its bid-ask spread may be wider than that of larger funds.

Global bond prices move with interest-rate trends in major economies. Prices have tended to come under pressure when rates are rising and to recover as expectations of rate cuts build. Because the fund is currency hedged, the direction of interest rates in each country drives performance more than currency moves.

Demand to diversify assets concentrated in US bonds has been flowing into overseas bond products. Hedged funds are mainly sought by money looking to remove currency risk, and interest tends to grow as the gap between US and overseas rates widens.

Its strengths are broader diversification into non-US bonds and reduced currency risk, while its low name recognition and short track record are drawbacks.

The BND (ETF), AGG ETF and SCHZ ETF shown in the table are core US-focused bond products and serve as benchmarks for fees and fund size. The one closest in character as a non-US bond fund is the IAGG ETF, and both products offer currency-hedged global ex-US exposure. For broader overseas bond exposure, compare it with products such as BNDX, and if you want unhedged overseas government bonds, with products such as IGOV.

Here are the items to review before buying this ETF. Because these are overseas bonds, you need to consider three things together: the direction of interest rates in each country, hedging costs and ease of trading. It is also worth checking in advance that the cost burden varies with your holding period.

Rising interest rates in various countries push bond prices down. If the rate gap between the US and overseas widens, hedging costs increase and performance shrinks. Investors should also keep in mind that the fund's small size can lead to less favorable execution prices when trading.

It is an option worth considering if your goal is to add overseas diversification to a portfolio weighted toward US bonds. If you want similar exposure, compare fees and fund size with products such as the IAGG ETF before deciding.