The leading Australian fund manager has officially launched the BetaShares Interest Rate Hedged Australian Investment Grade Corporate Bond (ASX:HCRD) on the ASX.
HCRD will allow investors seeking exposure to Australian corporate bonds to hedge their interest rate risk – an important consideration in light of continued interest rate increases projected over the coming months.
Moreover, the hedged bond ETF uses bond futures contracts to significantly reduce interest rate risk, as movements in government bond yields are typically the largest contributor to the volatility of fixed rate corporate bonds.
The strategy contained in HCRD also aims to reduce capital variability of the bond portfolio. HCRD retains full exposure to the credit component of the portfolio, being its primary source of return.
BetaShares is a market leader in cash and fixed income ETFs, with approximately $6.7 billion in assets under management across 11 funds.
According to CEO, Alex Vynokur, HCRD uses an intelligent indexing approach. Selecting the bonds in its portfolio based on expected returns rather than debt, the ETF aims to avoid shortcomings of traditional debt weighted indices.
He added that Australian corporate bonds are “regarded as a core building block of a well-diversified portfolio.”
“HCRD offers investors exposure to this core asset class in a way that reduces interest rate risk – an important consideration in an environment where inflation and interest rates are front of mind for investors and their advisers.
“Our versatile range of fixed income investment solutions allow investors to easily add defensive assets to their portfolios, tailored to their needs. We’re proud to offer another market-first ETF and to continue to contribute to the development of the Australian ETF industry”, Mr Vynokur concluded.
