Perpetual backs fixed income growth with active ETF
Perpetual Asset Management has launched its inaugural fixed income and credit active ETF, cashing in on the recent boom in the asset class.
Hitting the ASX on 7 August, Perpetual Diversified Income Active ETF (ASX:DIFF), an actively managed diversified portfolio of liquid, mainly investment-grade securities, offers investors access to assets such as senior debt and subordinated bank debt, which can often be more difficult to access directly.
The new ETF, Perpetual explained, is a unit class of the Perpetual Diversified Income Fund (DIF), an existing managed fund with $2.5 billion in funds under management.
Currently managed by Perpetual’s head of credit and fixed income Vivek Prabhu, DIF has reportedly delivered a net return above core inflation in 16 financial years over the last two decades.
Fixed income ETFs have been seeing strong support in recent months with $4.4 billion going into the funds in the first half of 2025, according to Betashares, compared to $1.8 billion in the prior corresponding period. Some $3 billion of this went into Australian bonds and $1.1 billion went into global ones.
Reflecting on the state of the global economy, Prabhu said: “Fixed income assets such as cash, bonds and credit offer defensive, lower-risk properties than equities and can help investors generate income, diversify their portfolios, preserve capital and hedge against economic conditions, which in today’s uncertain macroeconomic environment is a crucial element of an investment portfolio.
“With elevated equity valuations, uncertain growth outlooks and rising volatility reflecting challenging risk outlook for equities, together with interest rates trending downwards, credit and fixed income investments can offer a safer alternative with reduced volatility and better capital preservation than equities, while at the same time generating strong returns through different market cycles.”
Speaking with Money Management in May, JP Morgan Asset Management’s (JPMAM) global head of ETFs, Travis Spence, suggested he saw the boom in fixed income ETFs coming, particularly in the active space.
“One of the areas we are seeing particular interest from institutional investors is in fixed income which is traditionally an active asset class that can be difficult to access. They don’t always trade on a daily basis, so ETFs offered via the secondary market offer an extra layer of liquidity and that’s an additional benefit. That will be an area of growth going forward.”
Perpetual is not the only fund manager to launch fixed income ETFs lately, with Betashares launching a Global Aggregate Bond Currency Hedged ETF earlier this month and VanEck launching an Australian RMBS ETF, which will invest in AAA-rated Australian residential mortgage-backed securities.
AUTHOR
Shy-Ann Arkinstall
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