XBLD
Xtrackers II EUR Corporate Bond Short Duration UCITS ETF 1C
Published by Radif Partners · Updated
Overview
Xtrackers II EUR Corporate Bond Short Duration UCITS ETF 1C (XBLD) tracks the iBoxx EUR Corporates 1-3 index and holds its constituents directly, a physical replication managed by Xtrackers. Dividends are reinvested inside the fund rather than paid out, so XBLD suits investors building a position over time. The fund is domiciled in LU, which determines the withholding tax treatment applied to its dividends. Annual charges come to 0.15% of assets, and the fund holds 2.4B under management. Over five years the fund returned -2.2% a year on average, against 1.3% over three years. It is not eligible for the French PEA, but can be held in a securities account, a UK ISA or a German Depot. Its risk level is rated low. Launched on 2007-05-22, the fund is denominated in EUR and has 19 years of track record. It is a UCITS fund, so it follows the European framework on diversification, liquidity and asset segregation. Because XBLD accumulates, nothing is taxed while the shares are held: the charge falls on disposal, against your capital gains allowance in a general account, and not at all inside an ISA or a SIPP. Domicile in LU sets the withholding the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return.
Ongoing charges of 0.15% place this fund 47th of 79 comparable funds, whose median is 0.10%. On £10,000 that costs about 15 a year and 150 over ten years at a constant amount, deducted daily and never visible on a statement: it shows up in the gap between the fund's return and its index's. At this level, neither low enough to be an argument nor high enough to be an obstacle, the decision rests elsewhere: on the index tracked, on the distribution policy, and on what your broker charges to buy.
Replication is physical: the fund actually holds the constituents of iBoxx EUR Corporates 1-3, which makes its contents verifiable line by line in the issuer's report. Two points deserve attention. Securities lending first, practised by most physical funds to reduce costs: it earns a few hundredths of a point and creates an exposure to the borrower, covered by collateral, with the annual report stating the proportion lent. Rebalancing second: every change in the index's composition forces the fund to buy and sell, and those internal costs are not in the 0.15% headline. That is why two funds at the same price do not track their index with the same fidelity.
The domicile, Luxembourg, is not an administrative detail: it determines the withholding tax the fund suffers on the dividends it receives, and that loss appears in no fee table. Luxembourg has a comparable treaty network but is not as favourable as Ireland on US equities, a difference visible on a world index and not on a European one. For the holder, the UCITS framework also brings the key information document in their own language, diversification rules, and separation of the fund's assets from the issuer's.
Income is accumulated: dividends from the holdings are reinvested inside the fund rather than paid out. In a taxable account that defers taxation to the moment of sale instead of triggering it annually, leaving the whole return at work, and that is the main advantage of this share class. Two qualifications go with it. A holder who needs income has to sell units to obtain it, which is one more decision to take and sometimes at a bad moment. And the deferral is not universal: some countries tax a notional annual return whatever the distribution policy, in which case the accumulating class changes nothing.
With 2.4 billion in assets and 19 years of history, this fund has the size and the record that make closure unlikely and the spread narrow. Three checks remain, once a year, none of which depends on the market. The ongoing charge, which an issuer revises without notice and whose gap to a competitor can invert. The tracking difference, the only figure that says whether replication stays faithful. And the methodology of iBoxx EUR Corporates 1-3, which can change its selection or weighting rules without the fund's name moving, in which case what you hold has changed with nothing to announce it.
iBoxx EUR Corporates 1-3 tracks a bond market, which changes the question: the return on a bond portfolio is largely known in advance, as yield to maturity, while its market value moves with rates and with the risk premium demanded of issuers. Two figures govern this fund, duration and average credit quality, and neither appears in an annual return. On corporate credit, correlation with equities rises precisely when protection was expected.
Over one year the fund shows -3.6% and over five years -2.2% annualised, two figures close together, which is the most ordinary and least informative configuration: it does not say the fund is steady, only that the chosen start and end points resemble each other. Comparing these figures with another fund means something only if the index is the same; otherwise it is an index comparison dressed as a fund comparison.
0.15%
2.4B
2,412M EURLow
5,506
Physical
Accumulating
EUR
LU
iBoxx EUR Corporates 1-3
Xtrackers
2007-05-22 (19 years)
Contextual Analysis
Fund Size
With 2.4B in assets, this is a large fund, good liquidity and tight spreads.
Fee Positioning
A TER of 0.15% is among the lowest on the market, excellent value.
Track Record
Launched in 2007-05-22, this fund has 19 years of history, long and reliable track record.
Risk Profile
Low risk, suitable for cautious investors or short-term goals.
Performance
Returns Summary
| Period | Ann. Return | Cumulative |
|---|---|---|
| 1 Month (est.) | – | -0.3% |
| 3 Months (est.) | – | -0.9% |
| 6 Months (est.) | – | -1.8% |
| YTD (est.) | – | -1.5% |
| 1 Year | -3.6% | -3.6% |
| 3 Years | +1.3% | +4.0% |
| 5 Years | -2.2% | -10.6% |
| Since inception (19y) | -1.5% | -25.1% |
Key Facts
Fund Profile
Themes & Zones
Holdings
Risk
How to Buy This ETF
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About this ETF
The Xtrackers II EUR Corporate Bond Short Duration UCITS ETF 1C tracks the iBoxx EUR Corporates 1-3 index. It is managed by Xtrackers using physical replication and follows a accumulating distribution policy. The fund is denominated in EUR and domiciled in LU. It has a total expense ratio (TER) of 0.15%.
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Frequently asked questions
What do XBLD's 0.15% charges actually cost?
They are taken from the fund's value continuously and never billed separately: on £1,000 invested that is about £1.50 a year and roughly £15 over ten years at a constant amount. That is the only cost of the fund itself. Your broker's commission and the spread between buying and selling price come on top, and they weigh most on small frequent purchases.
Does XBLD lend out the securities it holds?
Probably in part: most physical funds lend securities to reduce their costs, and Xtrackers publishes the proportion in the annual report. Lending income is worth a few hundredths of a point, shared between the fund and the issuer. The risk is the borrower's, covered by collateral worth more than the amount lent, and it appears in the prospectus rather than in the stated fee.
Why does XBLD's Luxembourg domicile matter?
Because it determines the withholding tax the fund suffers on the dividends it receives, and that loss appears in no fee table. Luxembourg has a comparable treaty network but is less favourable than Ireland on US equities. The UCITS framework also brings the key information document in your own language.
Does XBLD pay dividends?
No: the fund accumulates, reinvesting the dividends of the companies it holds so that the unit price rises instead. In a taxable account that defers tax to the sale rather than triggering it annually. Anyone needing regular income has to sell units to obtain it, or choose a distributing class on the same index where one exists.
What is the real risk in XBLD?
Interest rates, not default. When rates rise, the value of bonds already issued falls, and the size of the move depends on the portfolio's duration: roughly one per cent per year of duration per point of rate. The figures to look at on this fund are therefore duration and yield to maturity, which says what the portfolio earns if nothing is sold. Neither appears in an annual return.
This ranking is for informational purposes only and does not constitute a recommendation to buy or sell any security. Displayed performance is simulated.