Cash ETF offers term deposit rates: BetaShares
BetaShares has responded to the introduction of Australian fixed income exchange-traded funds (ETFs) by announcing a cash ETF that it says will compete with term deposit rates.
Available on the Australian Securities Exchange from last Wednesday, the cash ETF was offering an initial variable rate of around 5.2 per cent, which BetaShares head of investment strategy Drew Corbett said is designed to exceed the 30-day bank bill rate.
The ETF holds Australian dollars on deposit with Australia's big four banks, with Westpac the primary holder at this stage, he said. Interest is accrued daily and distributions are paid monthly, he added.
One of the EFT's key differences to other cash and fixed income products in the market is that it has the flexibility of an at-call bank deposit account but with rates closer to term deposit rates - without, however, the lockup period or early withdrawal fees, Corbett said.
Fixed income ETFs are also subject to fluctuations in bond prices if the Reserve Bank raises bond prices, he added.
For advisers who are using platforms the cash ETF is simple to buy on a platform but has a higher interest rate than they would normally achieve on a cash savings accounts on a wrap platform, which tends to offer rates more around the RBA rate on average, Corbett said.
He said clients were crying out for income products as they moved into the retirement phase, and were also placing a strong emphasis on capital preservation.
Recommended for you
VanEck’s Bitcoin ETF has amassed $290 million in assets in its first year, but the ETF provider has said financial advisers remain skeptical of the asset.
State Street has rebranded its State Street Global Advisors arm, which has US$4.6 trillion in assets under management, following a series of deals with financial services firms in recent months.
Northern Trust Asset Management has appointed a new head of international and responsible investing.
More than 20 winners have been revealed for the annual Fund Manager of the Year Awards.
