VanEck to launch fixed income debt ETF

ETF provider VanEck is set to expand its fixed income range with the launch of the VanEck Australian Fixed Rate Subordinated Debt ETF (FSUB), hitting the ASX on Friday.

The firm said FSUB will complement the VanEck Australian Subordinated Debt ETF (SUBD) by offering fixed-rate exposure within the same regulatory capital framework which will enable investors to access attractive nominal yields and diversify their rate exposure.

Launched in 2019, SUBD provides investors with direct access to floating rate subordinated bonds issues by leading financial institutions, including Australia’s big four banks. The ETF now has more than $3 billion in total assets and has attracted more than $1 billion net flows in 2025.

Arian Neiron, chief executive and managing director of VanEck Asia Pacific, said the upcoming phase out of bank hybrids has accelerated the shift toward subordinated debt with this market growing more than $70 billion, while nearly half of new issuance now being fixed-rate.

“APRA’s mandated total loss absorbing capacity (TLAC) requirements for banks and other authorised deposit-taking institutions are driving continued Tier 2 issuance (~$15 billion per year),” Neiron said.

“Financial institutions have shifted Tier 2 capital issuance to both floating and fixed rate to accommodate increased investor appetite for defined income and duration exposures. The launch of FSUB gives investors a complete subordinated debt solution.”

Neiron added: “With the Australian yield curve steepening recently and the 10-year bond yield at a 12-month high, we think FSUB is well-positioned, offering investors the opportunity to access a fixed rate bonds portfolio that is currently yielding around 5.7 per cent.”

Commentary from Global X last month found Australian credit ETFs remain a key focus for inflows in the wake of hybrid securities rolling off with the sector seeing the highest-ever monthly inflows of $526 million.

At least $300 million has entered the segment each month over the past six months, reflecting investors’ renewed appetite for defensive, income-generating assets as yields remain elevated, and cash alternatives begin to lose their appeal.

This announcement follows the launch of the VanEck Uranium and Energy Innovation ETF (URAN) in October as the firm looked to take on opportunities as global political agendas point to expansion in the energy sector.

Supported by the push toward net-zero emissions, URAN provides exposure to the largest global companies in the uranium mining and nuclear energy sector, which VanEck said are typically under-represented in benchmarks.