Betashares fixed income ETF hits $1bn milestone

The Betashares Australian Composite Bond ETF (OZBD) has surpassed $1 billion in funds under management (FUM), driven by strong adviser demand for core Australian fixed income solutions.

Launched in 2022, the OZBD fund offers exposure to a diversified portfolio of high-quality Australian corporate and government bonds, chosen for their risk-adjusted income potential rather than traditional debt-weighted indices.

The fund has outperformed the Bloomberg AusBond Composite Index since inception, which Betashares attributes to its rules-based, enhanced-indexing approach developed in partnership with Bloomberg.

Cash and fixed income ETFs remain top of mind for investors. Year to date, the category has attracted nearly $12.2 billion in inflows, well above the $6.4 billion received last year.

Betashares head of fixed income Chamath De Silva said the fund’s enhanced-indexing methodology, created in collaboration with Bloomberg, allows it to systematically address the limitations of traditional bond indices, improving portfolio construction and return potential while keeping fees low.

“Reaching $1 billion in funds under management is a significant milestone for our flagship Australian fixed income ETF and a reflection of the growing demand for cost-effective, institutional-grade fixed income solutions,” De Silva said.

“OZBD employs the most effective rules-based techniques of traditional active management, but in a low cost, indexed strategy. This approach has delivered strong results, outperforming the benchmark Bloomberg AusBond Composite Index by 0.92 per cent per annum over the three years to November 2025, and beating some of the largest active core fixed income strategies over the same period.

“For this reason, OZBD is increasingly used as a core building block by many asset allocators, financial advisers, and investors, offering a robust fixed income solution.”

Betashares notes that while the ETF is best suited as a core allocation within diversified portfolios, it is particularly relevant in the current environment as investors seek reliable income solutions amid falling dividend yields and elevated equity valuations.

At 5.18 per cent, the fund’s yield also sits comfortably above long-run expectations for the average cash rate and roughly 2.5 per cent above market-implied inflation expectations over the next five years, offering the potential for attractive real returns.

The firm expects another strong year in 2026 for the fund and its broader suite of cash and fixed income strategies.

“With the milestone, our cash and fixed income ETF suite now stands at over $16 billion in assets, making Betashares the largest ETF manager in the asset class, and among the largest fixed income managers in Australia.”

Betashares is the leading provider of cash and fixed income ETFs in Australia after recently surpassing $16 billion in funds under management in the asset class and year to date seeing the largest flows in the industry to its range.