BetaShares joins Aussie ETF market

BetaShares Capital has launched its first two exchange-traded funds (ETFs) onto the Australian Stock Exchange, with products that track the resources and financial sectors in the S&P/ASX 200.

BetaShares tailors the structure of its ETFs to reflect the products’ target outcomes as well as the asset class they are tracking, the company stated.

BetaShares sector ETFs are swap-enhanced or ‘synthetic replication’ ETFs, which means that as well as investing in shares and cash like traditional ETFs, they can also enter into swap agreements to ensure returns track the relevant index as closely as possible, according to BetaShares.

“We believe this structure is superior for sector ETFs because the swap counterparty takes on the risk and cost of matching the performance of the index, reducing tracking error considerably. This is why swap-enhanced ETFs have become the new standard in the ETF market globally,” said BetaShares head of product strategy Drew Corbett.

BetaShares also plans to launch a currency ETF tracking the performance of the US dollar against the Australian dollar early next year.

The US dollar ETF will hold actual US dollars in bank deposit accounts to allow investors to gain exposure to the performance of the greenback, Corbett said.

“Over time we’re expecting to provide a larger suite of products for a wide variety of investors, including more complex investment strategies that appeal to more experienced investors,” he said.