BetaShares launches new bond ETF

BetaShares has launched the Australian Investment Grade Corporate Bond (CRED) exchange-traded fund (ETF), which would offer investors access to the Australian corporate bond market.

The fund would provide exposure to a portfolio of investment-grade, fixed-rate Australian corporate bonds and would aim to provide an income, paid monthly, which would be expected to exceed the income paid on cash, term deposits, government and composite bond exposure, the firm said.

At as 31 May, the portfolio of bonds in the index tracked by CRED provided a yield-to-maturity of around four per cent per annum versus a yield-to-maturity of 2.6 per cent per annum from the benchmark Australian Composite Bond Index and the current RBA cash rate of 1.5 per cent per annum.

According to the firm, it would also be the lowest-cost Australian fixed-rate corporate bond ETF currently available on the Australian Securities Exchange (ASX) (at 0.25 per cent per annum).

BetaShares managing director, Alex Vynokur, said that the launch of the new ETF responded to investors’ continued demand for fixed-income ETFs, a market which received over $360 million of inflows in the first four months of this year.

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 “We believe Australian corporate bonds have an important place in investors’ portfolios,” Vynokur said.

“CRED provides this access in a simple, cost-effective way, with the additional liquidity benefit of an exchange-traded fund.”