BetaShares launches bank floating rate bond ETF
Australian manager of exchange trade funds (ETFs), BetaShares has launched the Australian Bank Senior Floating Rate Bond ETF (QPON), aimed to offer investors income paid monthly and diversification benefits.
QPON, which would be the first ETF in Australia offering exposure to a diversified portfolio of bank floating rate bonds in one trade on the Australian Securities Exchange (ASX), would invest in a portfolio of some of the largest rate bonds issued by Australian banks.
Furthermore, the fund would invest at least 80 per cent of its assets in floating rate bonds issued by the ‘Big Four’, with the remaining 20 per cent being invested in bonds issued by the large ‘regional’ banks, including Macquarie Bank.
The company stressed that Australian bank senior floating rate bonds had low correlation to equities and therefore potentially offered defensive investment characteristics.
BetaShares’ managing director, Alex Vynokur, said that QPON would also provide access to a valuable investment strategy that was traditionally difficult for many investors to access directly due to high minimums in institutional bond markets and administrative burdens.
“Australian investors will now have access to an ETF that can be expected to deliver an increased total return, rather than decreased, during rising interest rate periods,” he said.
“In the current environment of historically low interest rates, we believe the case for investing in floating rate bonds is very compelling."
AUTHOR
Oksana Patron
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