Advisers boost demand for fixed income ETFs
Advisers are showing “renewed appetite” for fixed income ETFs, fuelling competition among global firms.
According to AUSIEX, advisers are among the biggest users of the approximately 70 fixed income ETFs available in Australia as advisers turn to the asset class for their older clients.
AUSIEX data revealed that actively managed fixed income ETFs have come back in favour among advisers, with the total advised holdings in domestic fixed income ETFs increasing by 55.3 per cent in the year to 31 January 2025, and close to 35 per cent more advised accounts holding the securities.
The asset class was particularly popular for advisers’ Baby Boomers clients, who were making up around 19 per cent of ETF buy trades and outstripping every other ETF strategy in 2024.
It also accounted for 11.4 per cent of buy trades for advised Gen X investors over the year to 31 January, highlighting advisers’ preference for this asset type among older investors.
The Betashares Active Australian Hybrids Fund was the most popular among advisers, making up 18 per cent of advised account holdings, followed by Vanguard Australian Fixed Interest Index ETF (11.3 per cent) and VanEck Australian Subordinated Debt ETF (9.5 per cent).
However, fixed interest was not among the top ETF strategies used by direct retail investors in any age group over that period.
Advisers’ renewed interest in fixed income products of late has sparked a competitive flame among global firms, with several launching new fixed income ETFs over the last few months.
PIMCO launched four new ETFs on Cboe Australia just last month, including the PIMCO Global Bond Active ETF (PGBF), PIMCO Diversified Fixed Interest Active ETF (PDFI), PIMCO Global Credit Active ETF (PCRD), and PIMCO Australian Bond Active ETF (PAUS).
Meanwhile, Schroders unveiled its Schroder Australian High Yielding Credit Fund - Active ETF in December.
Janus Henderson Investors is latest in this trend with the launch of Janus Henderson Australian Fixed Interest Active ETF, providing investors with exposure to government and semi-government bonds, as well as corporate and asset-backed securities.
Janus’ head of Australia, Matt Gaden, said the firm noted a “clear shift” in fixed income allocations as advisers continue to reassess their client portfolios. After a period of underweight exposure, many are now restoring bond allocations to benchmark levels – or even increasing them – to capture renewed opportunities in the asset class."
AUTHOR
Shy-Ann Arkinstall
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