BetaShares launches Australian composite bond ETF
BetaShares has launched its Australian Composite Bond exchange traded fund (ETF) which would offer investors access to a diversified portfolio of Australian bonds targeting higher returns and income.
The ETF aimed to track the Bloomberg Australian Enhanced Yield Composite Bond Index, before fees and expenses.
The index weighted bonds on the basis of their risk-adjusted income potential rather than debt-weighting, aiming to provide investors with higher returns than the most commonly used Australian fixed income benchmark, the AusBond Composite index.
The ETF aimed to maintain an overall duration and credit profile that was similar to that of the AusBond index.
Commenting on the launch, BetaShares chief executive, Alex Vynokur, said the ETF would offer a convenient and cost-effective way to invest in a diversified portfolio of high-quality Australian corporate and government bonds.
“[The ETF] has been designed to be a core portfolio allocation for fixed income for Australian investors and their advisers,” he said.
“[Its] intelligent investment approach seeks to avoid the shortcomings of traditional debt-weighted indices and aims to provide higher returns.
“The fund’s focus on income is particularly pertinent in a rising yield environment.”
The ETF’s index had historically outperformed the AusBond index over the long-term and in each of the past 10 financial years, and was offering a yield-to-maturity that was 0.65% p.a. higher than this index as at 31 January, 2021.
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