The Australian Corporate Bond Company (ACBC) has launched a fixed income solution that gives retail investors access on the ASX to returns from the wholesale bond market.
Exchange Traded Bond Units (XTBs) give investors – particularly retail investors – exposure to the returns from individual corporate bonds issued by top 50 ASX listed companies, normally restricted to institutional and wholesale investors, an XTB statement said.
“It’s really been the coming together of a perfect storm for Australian investors and the Australian corporate bond market,” ACBC chief executive Richard Murphy said.
“The GFC has caused people, globally and in Australia, to think a lot more about capital security, yield, proper asset class diversification, and outcom-focused investing, and this has led towards fixed income investments."
An XTB is an ASX-tradeable security that tracks the performance of a specific underlying bond with no minimum investment.
Investors can choose from 17 corporate bonds, with various maturities and yields to suit individual investment goals and timeframes, the statement said.
The XTB works by “taking the otherwise wholesale corporate bonds market and packaging it up in individual securities to give investors access to those underlying corporate bonds”, Mr Murphy explained, adding that XTBs have been designed to “fill the gaping hole” in the market in terms of fixed income options.
“With interest rates at historic lows – and expected to remain low – we saw a definite gap in the market and have identified a solution that can form part of the broader development of the corporate bond market," he said.
According to Mr Murphy, in the current low-rate environment, investors are increasingly asking, “where next for my money?”