What happened to AGGH ? (Euro hedged global aggr)

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Topic Author
Astones
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Joined: Mon Apr 12, 2021 12:48 pm

What happened to AGGH ? (Euro hedged global aggr)

Post by Astones »

I was checking several bond ETFs, and I stumbled in iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc)

I noticed it has a huge tracking error for 2019 and 2020. The largest I have ever seen.

What happened ?
Also, useless to say, I guess we should stay away from it ?
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BeBH65
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by BeBH65 »

Where do you see this tracking error? Don't forget this is a Euro hedged version.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Topic Author
Astones
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by Astones »

BeBH65 wrote: Fri May 07, 2021 12:11 pm Where do you see this tracking error? Don't forget this is a Euro hedged version.
I checked the KIID. You can find it for example in JustETF.

https://www.justetf.com/en/etf-profile. ... 00BDBRDM35
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BeBH65
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by BeBH65 »

Astones wrote: Fri May 07, 2021 11:56 am I was checking several bond ETFs, and I stumbled in iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc)

I noticed it has a huge tracking error for 2019 and 2020. The largest I have ever seen.

What happened ?
Also, useless to say, I guess we should stay away from it ?
Looks like they are showing the EURO-hedged-fund-version compared to the USD-(non-hedged)-version of the index.
"Of course" they do not track .

https://www.ishares.com/uk/professional ... ts/291770/
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Topic Author
Astones
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by Astones »

BeBH65 wrote: Fri May 07, 2021 12:29 pm Looks like they are showing the EURO-hedged-fund-version compared to the USD-(non-hedged)-version of the index.
"Of course" they do not track .

https://www.ishares.com/uk/professional ... ts/291770/
I see. Thanks.
Then the follow up would be, how can I assess whether the ETF is doing a good job in reproducing the index ?
Also, should I prefer its unhedged cousin AGGG ?
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tre3sori
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by tre3sori »

Astones wrote: Fri May 07, 2021 12:40 pm Then the follow up would be, how can I assess whether the ETF is doing a good job in reproducing the index ?
Also, should I prefer its unhedged cousin AGGG ?
Under the performance data of iShares fund page you have the annualised and cumulative performance of the fund and its benchmark
https://www.blackrock.com/uk/individual ... cits-etf#/

More intuitive is the Morningstar fund chart of AGGH (blue and filled) in comparision to the index LEGATRUU (black), the unhedged, distributing version AGGG (red, the currency risk manifested itself as a chance in the choosen period) and a newer Vanguard competitor VAGF (green). As always, Morningstar does not get the legend right.
Image

A common way to manage currency risk is to hedge the bond part of your portfolio to the currency you expect to the spend the money in. If you are not sure and expect an international livestyle, don't hedge the bond part.
Last edited by tre3sori on Fri May 07, 2021 2:06 pm, edited 2 times in total.
The information provided is intended to be entertaining. It is not to be construed as professional advice. Use it at your own risk.
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galeno
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by galeno »

Very good question. Let's keep it simple. I'm USD based.

Hedged usually means lower volatility.

Unhedged usually gives better ballast when equities crash.

If I weren't such a simplicity fanatic I'd just split the difference and go 50/50 AGGG / VAGU.
KISS & STC.
Topic Author
Astones
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by Astones »

tre3sori wrote: Fri May 07, 2021 2:02 pm More intuitive is the Morningstar fund chart of AGGH (blue and filled) in comparision to the index LEGATRUU (black), the unhedged, distributing version AGGG (red, the currency risk manifested itself as a chance in the choosen period) and a newer Vanguard competitor VAGF (green). As always, Morningstar does not get the legend right.
It's a bit of a letdown that the main website does not provide the proper information about the tracking error. i find the way they make the comparison pretty unclear. They show that AGGG is tracking just fine, but what I want to know is whether with AGGH they're doing a good job as well.
If we take the Vanguard equivalent, they do use a benchmark that is also currency hedged so that an apple to apple comparison is possible.

Perhaps i'm not familiar enough with these documents but I find them rather confusing.
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galeno
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Re: What happened to AGGH ? (Euro hedged global aggr)

Post by galeno »

Remember. AGGG, AGGU, AGGH, etc are the SAME UCITS ETF.

Currency Exposure 5 May 2012

U.S. Dollar 41.56%
Euro 23.79%
Japanese Yen 13.42%
Chinese Yuan 6.88
British Pound 5.06%
Canadian Dollar 2.88%
Australian Dollar 1.51%
South Korean Won 1.10%
Swiss Franc 0.54%
Swedish Krona 0.45%
KISS & STC.
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