Fixed income specialist FIIG Securities has partnered with German index firm Solactive to launch Australia’s first domestic high yield bond index, the Solactive FIIG Australian High Yield and Non-Rated Bond TR Index.
The index was the first to exclusively cover high yield and non-rated bonds in Australia, to help investors and advisers making investment decisions, and function as a leading benchmark for AUD-dominated high yield bonds.
The index had data dating back to 2012 and was engineered to mirror the performance of the AUD-denominated Australian high yield corporate bonds universe which included rated and unrated constituents.
Since inception in December 2012, the index had generated a cumulative return of 59.4% to 30 September, 2019, or a compound annual return of 7.15%.
The index had 51 bonds issued by 41 issuers, with AGL Energy, Crown Resorts, NextDC, Downer and Virgin being the top five in volume and collectively 48% of the index.
Jonathan Sheridan, chief investment strategist at FIIG Securities, said corporate bonds had flown under the radar because of the difficulty of access for Australian investors.
“We expect this new index will contribute to our strategy to demystify the bond market in Australia and make this far more appealing for investors,” Sheridan said.