Betashares has announced a new exchange-traded fund (ETF), its Global Aggregate Bond Currency Hedged ETF (ASX: WBND), which offers global exposure to investment grade bonds.
The ETF provides exposure to a global bond index comprising over 30,000 treasury, government-related, corporate and securitised bonds, originating from 3,100 issuers across more than 70 countries, all hedged into Australian dollars.
Betashares CEO Alex Vynokur said WBND will offer investors a convenient and cost-effective method for investing in a diverse portfolio of quality global bonds.
“Betashares has led the way in opening more parts of the fixed income universe with the provision of institutional grade investment solutions,” he said.
It is also the only ETF that tracks the official APRA benchmark for the asset class. As well as this, Betashares has elected to implement taxation of financial arrangements hedging, which provides “more efficient after-tax outcomes, as well as smoother cash distribution profiles, for Australian investors in mind”, according to Vynokur.
As central banks around the world have entered a rate easing cycle, with economists forecasting more policy rate reductions in key markets, cash and fixed income ETFs have been a topic of discussion among investors and financial advisers.
During the financial year, cash and fixed income ETFs have recorded $9.9 billion in net flows, according to Betashares data. Back in May, flows into cash and fixed income ETFs experienced threefold growth from the previous month.
Speaking to Money Management in April, JP Morgan Asset Management’s global head of ETFs, Travis Space, said he anticipated a surge in fixed income ETFs as they provide access to an asset class which is traditionally hard to reach.
“They don’t always trade on a daily basis, so ETFs offered via the secondary market offer an extra layer of liquidity and that’s an additional benefit. That will be an area of growth going forward,” he said.
Betashares has, in many ways, led the charge in democratising access to cash and fixed income investments, areas traditionally reserved for institutional investors. In recent years they have launched Australian-first ETFs covering exposures like high-interest cash, hybrids, floating rate notes and defined income ETFs.
As inflation continues to ease and major central banks continue to cut interest rates, Betashares anticipates investor interest in fixed income to sustain.
