BetaShares has announced an Australian Major Bank Hybrids Index exchange traded fund (ETF), aimed at those investors struggling for income in a low-rate environment.
The BHYB ETF would offer a cost-effective way to get exposure to a portfolio of listed hybrid securities offered by the big four banks.
BetaShares said hybrid securities offered attractive franked income returns with moderate volatility and relatively low correlation to equities. They also produced risk and return characteristics above those of bonds but below equities.
The firm already ran an ETF focusing on active Australian hybrids which was over $1 billion in assets under management.
To be included in the new ETF, the security must be a listed preference share, have a market cap of at least $100 million and be rated at least investment grade. The ETF’s management cost was 0.35% per annum.
BetaShares chief executive, Alex Vynokur, said: “Record low interest rates present a significant challenge for investors seeking income. Our new ETF offers attractive income, but only holds hybrids backed by our big four banks, which are among the most profitable and prudentially sound banks in the world. BHYB offers investors who understand the features and risks of hybrids a convenient, cost-effective way to access this unique asset class.
“The growth of our Active Australian Hybrids Fund has demonstrated that there is strong demand for exchange traded funds which provide access to the hybrids market. We have additionally heard from our investors that there is demand for a passive exposure to the hybrids market, which we are now proud to deliver with BHYB.”