Betashares has launched the Australian Major Bank Subordinated Bond ETF (BSUB) on the ASX, bringing its range of cash and fixed income ETFs to a total of 19 investment solutions.
The new fund provides intelligent exposure to a portfolio of high-quality Tier 2 floating rate subordinated bonds issued by the big four Australian banks. To be eligible for inclusion in BSUB, bonds must have amounts outstanding of at least $500 million and a remaining maximum term to maturity of 10 years.
“Generally, Tier 2 floating rate subordinated bonds offer attractive income potential, typically delivering returns above that of senior bank floating rate notes, along with a high degree of capital stability,” Betashares explained.
“At the same time, the income paid by these bonds varies in line with benchmark interest rates, offering protection against rising interest rates.”
The fund manager has $10.5 billion in funds under management in cash and fixed income ETFs and has received around $2.5 billion in net flows to these ETFs in the last 12 months.
Betashares chief executive Alex Vynokur said the fund manager was excited to launch BSUB as it continues to broaden its range of investment options available to Australian investors and their financial advisers.
He observed: “BSUB offers investors attractive monthly income, a high degree of capital stability, along with potential portfolio diversification benefits due to Tier 2 floating rate bonds historically exhibiting a low correlation to equities.”
Earlier this month, the fund manager also launched two “moderately geared” ETFs, believed to be the first such offering in Australia.
The Betashares Wealth Builder Australia 200 Geared Complex ETF will provide moderately geared exposure to the returns of the broad Australian sharemarket while the Betashares Wealth Builder Diversified All Growth Geared Complex ETF will provide moderately geared exposure to the returns of an “all-cap, all-world” share portfolio.
The funds are anticipated to provide a gearing ratio between 30 to 40 per cent on a given day.
