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Government Bonds ETF

For a Cautious Investor

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.

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.

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

Why the VanEck Government Bonds ETF?

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

x
x

* 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 Shares % of Net
Assets
French Republic Government Bond Oat 6341000 10.37
French Republic Government Bond Oat 5724000 10.16
French Republic Government Bond Oat 5925000 9.58
Bundesrepublik Deutschland Bundesanleih 5316000 8.94
Bundesrepublik Deutschland Bundesanleih 5155000 8.51
Bundesrepublik Deutschland Bundesanleih 5160000 8.48
Kingdom Of Belgium Government Bond 3221000 6.55
Kingdom Of Belgium Government Bond 3610000 6.14
Netherlands Government Bond 3200000 5.38
Netherlands Government Bond 3089000 5.06
Top 10 Total (%) 79.17

Main Risk Factors of a Government Bonds ETF

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Changes in interest rates have a significant influence on the results of fixed-income securities issued by governments. Potential or actual downgrades in the credit rating can increase the assumed risk level.

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The issuer of the security held by the Fund may be unable to pay interest that has fallen due or repay capital.

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Lower liquidity means there might not be enough buyers or sellers to allow the Fund to easily trade the investments. This is an additional factor to take into consideration before investing in a Government Bonds ETF.