A first of its kind, according to Betashares, the Defined Income Bond ETFs range are designed to meet the needs of income-focused investors seeking greater predictability in cash flow and capital return.
The new funds are:
- The Betashares 2028 Fixed Term Corporate Bond Active ETF (ASX:28BB), which matures in May 2028.
- The Betashares 2029 Fixed Term Corporate Bond Active ETF (ASX:29BB), which matures in May 2029 and
- The Betashares 2030 Fixed Term Corporate Bond Active ETF (ASX:30BB), which matures in May 20230.
Betashares explained that each fund combines the features characteristic of an ETF – the likes of diversification, flexibility, liquidity and transparency – but also that of a single bond held to maturity, including regular payments and a set end date.
Here, investors receive fixed monthly income payments until the maturity date, at which point investors receive the value of their units. It mirrors the experience of holding an individual bond to maturity, but like any ETF, investors have the flexibility to buy or sell any time prior to maturity.
Moreover, each ETF in the range holds a diversified portfolio of investment-grade Australian corporate bonds that mature in the 12 months leading up to each specified date.
As the Reserve Bank looks towards monetary policy easing, the fund manager said the value proposition for Australian investors is strong, given that yields on cash are expected to fall in line with reductions to the cash rate.
Commenting on the launch, Betashares chief executive Alex Vynokur said investors can enjoy the predictability of the return of capital at maturity date.
“Australian investors are known for their love of higher income yields from their portfolio, and our new range of Defined Income ETFs will assist with this goal,” Vynokur said.
“Over the last decade, Betashares has been a pioneer in opening more parts of the fixed income universe to investors through the launch of innovative ETFs that offer access to opportunities once the domain of large institutions.
“Our Defined Income ETFs further this goal by providing investors with predictable, compelling income as well as the liquidity, transparency and diversification benefits of an ETF.”
According to Betashares, defined income ETFs are widely adopted by investors in other regions of the world, including the US, where they are often used as an alternative or complement to term deposits and fixed term annuities as a way to boost income without having to lock up capital.
