Australian market sees its first active fixed income ETF

by , 26th November 2018

BetaShares has announced its partnership with asset manager Legg Mason for the launch of the third active ETF issued by the pair. The BetaShares Legg Mason Australian Bond Fund (ASX:BNDS) is Australia’s first actively managed fixed income ETF.

BNDS enables investors to access an active product, comprised of Australian fixed income securities, to diversify a potentially equity-dominated portfolio. The breakdown of BNDS is 56.4 per cent corporate bonds, 20.8 per cent semi-government bonds, 17.7 per cent government bonds, 2.8 per cent supranational and the remainder being cash. The objective of the fund is to outperform the Bloomberg AUS Bond Composite Index over rolling three-year periods.

Period BNDS Return Benchmark
1 month 0.47 per cent 0.48 per cent
3 months 0.84 per cent 0.87 per cent
1 year 3.07 per cent 3.09 per cent
3 years (p.a) 3.18 per cent 2.92 per cent
5 years (p.a) 4.60 per cent 4.39 per cent

 

The ASX 200 has faced difficulties in the last few months having fallen 10 per cent since the end of August, similar to the US and UK as the S&P 500 and FTSE 100 are experiencing a bear run. In Australia, bonds tend to rise in value as shares fall, according to BetaShares. With the ASX 200 in decline, it is likely the bond market will see an influx as a result and explains the timeliness of the launch of BNDS.

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