Betashares unveils credit income ETF

Betashares has expanded its fixed income range with the launch of its Australian credit income ETF, offering income-focused investors an alternative to direct hybrids.

Unveiling its newest offering, the ETF provider said that the Betashares Australian Enhanced Credit Income Complex ETF (ECRD) aims to provide investors with a higher level of income than traditional bond funds and hybrids, while maintaining a volatility profile similar to hybrids.

ECRD invests in a portfolio of high-quality floating rate subordinated bonds issued by Australia's big four banks – Commonwealth Bank, Westpac, NAB and ANZ – and interest rate-hedged Australian investment grade corporate bonds, with yields enhanced through gearing at institutional borrowing rates.

Betashares chief executive Alex Vynokur said: “Our growing range of robust fixed income solutions continues to help investors build stronger portfolios and meet their income goals. Against a backdrop of bank hybrids being phased out and dividend yields on shares trending lower, ECRD offers a timely and compelling addition to our range of income solutions.  

“By combining high-quality Australian investment grade bonds that have exhibited attractive risk-adjusted returns with a structure that enhances income potential, we’re giving investors the opportunity to boost income without taking on equity risk.”

Fixed income ETFs have seen a surge of inflows recently, with Betashares’ November ETF report revealing that inflows into this market hit $1.79 billion in October, up from $1.22 billion the previous month.

At the same time, monthly commentary from Global X ETFs noted strong growth in Australian credit ETFs which recorded its highest-ever monthly inflows of $526 million. The ETF provider attributed this growth to the phase out of hybrids.

Global X said: “The Australian Credit ETF category recorded its highest-ever monthly net flows of $526 million last month, marking positive net inflows in 39 of the past 40 months, with at least $300 million entering the segment each month over the past six months. This consistent growth reflects investors’ renewed appetite for defensive, income-generating assets as yields remain elevated, and cash alternatives begin to lose their appeal.”

Betashares is continuing its steady flow of launches seen through the year, with its most recent being the launch of the Betashares Global Shares Ex-US ETF (EXUS) and the Betashares FTSE Global Infrastructure Shares Currency Hedged ETF (TOLL) early last month.

The firm said these new ETFs are part of its strategic expansion strategy to support financial advisers in building more diversified portfolios.