Fixed income ETFs a step closer

State Street Global Advisors (SSgA) has welcomed yesterday's launch from S&P Indices and the Australian Securities Exchange of the S&P/ASX Australian Fixed Income Index Series, saying it could finally lead to fixed income exchange traded funds (ETFs) being made available in Australia.

S&P Indices said the series would provide a complete offering across cash, fixed income and equities. The seven new indices cover the Australian bond market; commonwealth, state and corporate bonds; supranational and sovereign bonds as well as a bank bill index.

Frank Henze, Asia-Pacific head of SPDR ETFs at SSgA, said fixed income ETFs would provide Australian investors simple, safe, and transparent access to fixed income assets.

"Such a move would especially benefit investors nearing or at the retirement age, who are looking to inject more stability into their superannuation portfolios," he said.

Fixed income ETFs would assist those moving from wealth creation to capital protection and income generation to reduce their exposure to volatility, and the timing was right with fixed income yields in Australia looking very attractive compared to other international jurisdictions, he said.

SSgA's introduction of a fixed income ETF was dependent on the Australian Securities and Investments Commission finalising regulations that would allow the products to be offered, he said.

The series launch is a direct response to interest from investment managers, investment product sponsors, managed and superannuation funds and professional advisors for an independent specialist index provider, according to S&P Indices.