VanEck and Bentham partner on active ETF
VanEck and Bentham Asset Management have partnered to launch the VanEck Bentham Global Capital Securities Active ETF which will create a portfolio of capital securities including Tier 1 (AT1) securities, contingent convertibles, and subordinated debt securities.
Capital securities were similar in nature to Australian hybrid securities which had both equity-like and debt-like characteristics.
The exchange traded fund (ETF) was professionally managed by Bentham and aimed to deliver investors an after-fee return in excess of the RBA cash rate +3% p.a. over the long term, with monthly dividends.
Arian Neiron, VanEck chief executive and Asia Pacific managing director, said the fund gave investors access to a wider opportunity set with the ability to generate attractive income via an actively managed and globally diversified capital securities strategy.
“Global capital securities offer an opportunity for investors to diversify their income away from concentrated Australian exposures, harnessing a sizeable global universe with deeper liquidity,” Neiron said.
“[The fund’s] yield is attractive compared to corporate investment grade and ASX-listed hybrids.
“This actively managed ETF will offer investors exposure to offshore bank and insurance capital markets that are over 30 times larger than the domestic ASX bank hybrid market.”
Richard Quin, Bentham chief investment officer and managing director, said global capital securities complemented the local hybrid market and offered investors an alternative source of income in an era where attractive income sources were scarce.
“With rates near all-time lows, capital securities can provide investors with regular income, whilst diversifying investors’ portfolios that are often heavily skewed towards Australian financials,” Quin said.
“We have been investing in global credit markets and capital securities for many years and we look forward to offering this standalone investment to Australian investors. Global capital securities offer a deeper market compared to locally issued hybrids.”
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