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Government Bonds ETF

For a Cautious Investor

Marketing Communication

We Offer Two Government Bonds ETFs

Looking to invest in bonds? Eurozone government bonds are generally considered to be one of the safest investments available, as they are backed by the full credit of the respective governments. While investing in government bonds is still associated with risks, they tend offer a more stable source of income compared to equities and corporate bonds, which are subject to greater market fluctuations. VanEck’s Government Bonds ETF Suite provides investors with a tool to diversify and deleverage their exposure.

TAT Fund Overview
VanEck iBoxx EUR Sovereign Capped AAA-AA 1-5 UCITS ETF
  • Targeted exposure to the highest-quality Eurozone government bonds
  • Remaining maturity of 1 to 5 years
  • Limited credit risk and interest rate exposure compared to a broad Government Bonds ETF
TAT

ETF Details

ETF Details

Basis-Ticker: TAT
ISIN: NL0010273801copy-icon
TER: 0.15%
AUM: €51.0 M (as of 08-11-2024)
SFDR Classification: Article 6

Lower risk

Higher risk

Typically lower reward

Typically higher reward

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TGBT Fund Overview
VanEck iBoxx EUR Sovereign Diversified 1-10 UCITS ETF
  • Targeted exposure to Eurozone government bonds
  • Only bonds with an investment grade rating
  • Remaining maturity of 1 to 10 years
TGBT

ETF Details

ETF Details

Basis-Ticker: TGBT
ISIN: NL0009690254copy-icon
TER: 0.15%
AUM: €28.7 M (as of 08-11-2024)
SFDR Classification: Article 6

Lower risk

Higher risk

Typically lower reward

Typically higher reward

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Risk of a Government Bonds ETF: Investors may lose money up to the total loss of their investment due to the Main Risk Factors such as Credit Risk, Liquidity Risk and Changes in Interest Rates as described in the KID (TAT/TGBT) and prospectus.

Why Invest in a Government Bonds ETF?

Income Potential With Limited Risks

Are you looking to potentially cushion your investments against unforeseen risks? If so, Eurozone government bonds can be considered. The perceived likelihood of a government defaulting on its loan payments is relatively low, so such bonds are often viewed as the more solid investments.

  • What Are Government Bonds?
  • Advantages of Government Bonds

Governments everywhere borrow money for public spending. In fact, the bond market is the world’s largest financial market and government bonds are the largest part of it.1Governments normally commit to reward investors by paying a coupon, or interest, on the bond, as well as to repay it at maturity after a set number of years. So, investing in government bonds is a contribution to countries being able to finance their public services – from transport, to healthcare, to education.

1 Source: ICMA.

Investing in a Government Bonds ETF can be a fitting opportunity for investors looking for:

  • Relative stability
  • Potential for regular income
  • Risk diversification
  • Capital preservation

Investing in Government Bonds Can Be Beneficial to Investors for Several Reasons

Relative Stability
Government bonds are generally considered to be low-risk investments. Governments, particularly...
Potential for Regular Income
Government bonds often pay a fixed interest rate, known as the coupon rate, at regular intervals. This...
Diversification
Retail investors often tend to be invested solely in equities, not considering diversification...

Why the VanEck Government Bonds ETF?

Both variants of the Fund deliver a blend of relatively low cost and high quality.

Relatively Low Costs No Security Lending Geographical Diversification Quality

Interest Rate Risk

One of the main risks of investing in Fixed Income ETFs is the interest rate risk. When the interest rates rise, the bond price is expected to drop, because the bond income is discounted at a higher rate. This drop is usually more pronounced in bonds of higher quality, since they tend to pay lower yields. Measure of sensitivity of a bond’s price to changes in the interest rates is called duration. This is a factor to consider when investing in a Government Bonds ETF.

For long-term investors in bonds, interest rate changes bring two opposing forces into play:

  • Price risk: bond prices tend to fall when the interest rates rise and would normally go up if the rates go down.
  • Reinvestment risk: higher rates provide investors with a on opportunity to invest their income at higher yields, while lower rates would leave investors scrambling for opportunities to invest at similar yields.

Interest Rate Risk

Prices of the bonds that are reaching their maturity normally converge to their par – the amount repaid at the bond expiration. Such bonds are also less susceptible to the interest rate risk.

Bond ETF Returns Vs Interest Rates

Changing Tides

After Years of Low Yields, Income is Finally Returning to Government Bond ETFs2

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* Past performance is not a reliable indicator for future performance. Source: VanEck. Yield is represented by Yield-to-Worst.

2 This is not guaranteed to persist in the future.

Top 10 Holdings

Holding Name % of Net
Assets
French Republic Government Bond Oat 10.44
French Republic Government Bond Oat 9.98
French Republic Government Bond Oat 9.27
Bundesrepublik Deutschland Bundesanleih 8.91
Bundesrepublik Deutschland Bundesanleih 8.87
Bundesrepublik Deutschland Bundesanleih 8.35
Kingdom Of Belgium Government Bond 6.66
Netherlands Government Bond 5.22
Kingdom Of Belgium Government Bond 5.07
Netherlands Government Bond 4.86
Top 10 Total (%) 77.62
View All Holdings

Main Risk Factors of a Government Bonds ETF

  • Credit Risk
  • Liquidity Risks
  • Interest Rate Risk
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The issuer or guarantor of a debt security may be unable and/or unwilling to make timely interest payments and/or repay the principal on its debt or to otherwise honour its obligations. Bonds are subject to varying degrees of credit risk which may be reflected in credit ratings. There is a possibility that the credit rating of a bond may be downgraded after purchase, which may adversely affect the value of the security.

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Exists when a particular financial instrument is difficult to purchase or sell. If the relevant market is illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous or reasonable price, or at all.

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Bond prices could rise or fall as the result of changes in the interest rates and the interest rate curve. Potential or actual downgrades in the credit rating can increase the assumed risk level.

For more information on risks, please see the “Risk Factors” section of the relevant Fund’s prospectus, available on www.vaneck.com.

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