XGIU
Xtrackers II USD Corporate Bond UCITS ETF 1D
Published by Radif Partners · Updated
Overview
Xtrackers II USD Corporate Bond UCITS ETF 1D (XGIU) tracks the iBoxx USD Liquid Investment Grade index and holds its constituents directly, a physical replication managed by Xtrackers. Dividends are paid out to holders rather than reinvested, so XGIU suits investors seeking regular income. The fund is domiciled in LU, which determines the withholding tax treatment applied to its dividends. Annual charges come to 0.12% of assets, and the fund holds 2.0B under management. Over five years the fund returned -2.6% a year on average, against 2.1% 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 2010-05-25, the fund is denominated in USD and has 16 years of track record. It is a UCITS fund, so it follows the European framework on diversification, liquidity and asset segregation. Because XGIU distributes, every payment is taxable in the year it is received, against the dividend allowance in a general account, while it stays sheltered 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 0.12% place this fund 42th of 79 comparable funds, whose median is 0.10%. On £10,000 that costs about 12 a year and 120 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 USD Liquid Investment Grade, 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 0.12% 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 distributed: the fund pays out the dividends it receives, usually one to four times a year. For a holder living off the portfolio that is what is wanted, since the income arrives without selling. For someone still accumulating it is a tax disadvantage in a taxable account: each payment is taxed in the year received, so the amount reinvested is reduced before it starts working again. Reinvesting by hand also costs a dealing commission each time and often leaves cash idle for want of the price of a whole unit. An accumulating class on the same index, where one exists, settles the question.
With 2.0 billion in assets and 16 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 USD Liquid Investment Grade, 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 USD Liquid Investment Grade 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 1.7% and over five years -2.6% 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.
0.12%
2.0B
2,000M USDLow
3,631
Physical
Distributing
USD
LU
iBoxx USD Liquid Investment Grade
Xtrackers
2010-05-25 (16 years)
Contextual Analysis
Fund Size
With 2.0B in assets, this is a large fund, good liquidity and tight spreads.
Fee Positioning
A TER of 0.12% is among the lowest on the market, excellent value.
Track Record
Launched in 2010-05-25, this fund has 16 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.) | – | +0.1% |
| 3 Months (est.) | – | +0.4% |
| 6 Months (est.) | – | +0.9% |
| YTD (est.) | – | +0.7% |
| 1 Year | +1.7% | +1.7% |
| 3 Years | +2.1% | +6.5% |
| 5 Years | -2.6% | -12.4% |
| Since inception (16y) | +0.4% | +6.7% |
Key Facts
Fund Profile
Themes & Zones
Holdings
Risk
How to Buy This ETF
Select your country in the menu to see available brokers and wrappers.
About this ETF
The Xtrackers II USD Corporate Bond UCITS ETF 1D tracks the iBoxx USD Liquid Investment Grade index. It is managed by Xtrackers using physical replication and follows a distributing distribution policy. The fund is denominated in USD and domiciled in LU. It has a total expense ratio (TER) of 0.12%.
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Frequently asked questions
What do XGIU's 0.12% charges actually cost?
They are taken from the fund's value continuously and never billed separately: on £1,000 invested that is about £1.20 a year and roughly £12 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.
Why does XGIU'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 XGIU pay dividends?
Yes: the fund distributes and pays out the dividends it receives, on a calendar set by Xtrackers. The payment is taxable in the year you receive it in most accounts, even if reinvested at once, and reinvesting by hand costs a commission each time. An accumulating class on the same index avoids that friction for anyone who does not need the income.
What is the real risk in XGIU?
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.
How do you buy XGIU, and on which venue?
Through any broker that lists ISIN LU0478205965. The same strategy often exists in several share classes with different fees and distribution policies, and what counts is the class you buy rather than the one you read about: check the ISIN, not the name. A limit order avoids paying the spread of a thin order book, particularly outside the trading hours of the underlying markets.
This ranking is for informational purposes only and does not constitute a recommendation to buy or sell any security. Displayed performance is simulated.