Betashares has announced the launch of a new fixed income offering that seeks to invest fully in an ethically screened portfolio of Australian bonds.
The Betashares Ethical Australian Composite Bond ETF (ASX: AEBD) provides exposure to a diversified portfolio of high-quality Australian corporate and government bonds. The bonds are screened to exclude issuers, with the exception of sovereign bond issuers, with material exposure to fossil fuels or engaged in activities considered inconsistent with responsible investment considerations.
The fund marks the latest addition to Betashares’ range of ethical and responsible investment ETFs, which include nine funds and a total of $5.6 billion funds under management as of end September 2024.
According to the fund manager, AEBD represents a “breakthrough” in ethical Australian fixed income investing amid a growing appetite for the asset class among investors and financial advisers.
Australian fixed income ETFs have witnessed more than $10.3 billion in net flows since October as global interest rate hikes in the last two years turned the spotlight on fixed income.
Investor interest is only expected to further strengthen as inflation continues to moderate and major central banks commence interest rate cuts, Betashares observed.
“AEBD represents a core portfolio building block for ethically minded Australian investors and their advisers seeking an intelligent fixed income allocation that reflects responsible investment principles,” said Betashares chief executive, Alex Vynokur.
“We’re proud to leverage our market leadership in both ethical and fixed income ETFs to offer a unique portfolio solution that meets the evolving preferences of advisers and investors alike.”
AEBD aims to track an index that combines robust ESG screens with an intelligent investment strategy that weights bonds on their risk-adjusted income potential, rather than adopting a debt-weighted indexing approach.
This strategy, according to Betashares, seeks to provide higher returns compared to standard fixed income benchmarks, such as the AusBond Composite Index.
Vynokur also reiterated Betashares’ commitment to delivering ETFs that meet the dual goals of delivering financial returns and meeting responsible investment considerations.
In 2017, Betashares was the first ETF provider to announce offerings that combine a broad range of ethical eligibility screens for international and Australian equities with its Global Sustainability Leaders ETF (ASX: ETHI) and Australian Sustainability Leaders ETF (ASX: FAIR) respectively.
“We believe AEBD will become a foundational element in the portfolios of many ethically minded Australian investors,” Vynokur said.
