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.

Related News: Blocks with blockchain in markets

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.

Related Content

NSW adviser faces 19 charges

A former NSW financial adviser, Gabriel Nakhl, has appeared in the Local Court of New South Wales on 19 charges of engaging in dishonest conduct with ...more

Women hesitant to take investment risk

The tendency for women to shy away from taking appropriate levels of risk in their portfolio and their lower risk tolerance could be leading to lower ...more

Morrison refuses to budge on super caps

Federal Treasurer, Scott Morrison, has denied the Federal Budget represents a back-track on the superannuation policy direction he outlined to the SMS...more



Add new comment