XTBs smash through $100m FUM

XTBs corporate bonds available on the Australian Securities Exchange (ASX) have reached over $100 million in funds under management (FUM), on the back of adviser and investor demand for tradable fixed income securities.

Launched by Australian Corporate Bond Company (ACBC) in May 2015, a total of 48 XTBs were now available on the ASX, or via 25 platforms and approved for distribution by 150 Australian dealer groups.

Every XTB was an ASX tradable security, that delivered price stability and returns of a corporate bond (after fees and expenses) with no minimum investment, ACBC said.

The firm also launched four industry-first XTB-only model portfolios as advisers were also demanding multiple portfolios that made corporate bond exposure simple.

ACBC co-founder and chief executive, Richard Murphy said: "Reaching the $100 million milestone only four months after hitting the $50 million milestone is a testament to the strength of the XTB proposition".

"It is also a lead indicator of the growing momentum behind fixed income securities being adopted by investors and SMSF [self-managed superannuation fund] portfolios."

Investors were demanding corporate bonds and XTBs as they wanted defensive yield-producing investments, with a known outcome, Murphy said.

Bond funds and exchanged traded funds (ETFS) also provided fixed income exposure, but they often tracked government bond dominated indexes, or carried a level of interest rate risk, if rates were to rise, he said.

"You don't get your capital back with [those] funds and ETFs and so you cannot predict what the return will be in the way you can with bonds held individually.

"But by holding bonds or XTBs individually — on the day you make the investment, you know exactly what you will receive and when you will receive it," Murphy said.