German index provider Solactive has launched a fixed income index offering exposure to both high yield and non-rated bonds in Australia.
The Solactive FIIG Australian High Yield and Non-Rated Bond index enables investors to asses the performance of the AUD high yield bond market.
The index is designed to mirror the performance of the AUD-denominated Australian corporate bonds rated high yield or not-rated universe.
The launch follows a partnership between Solactive and Australian fixed income specialist FIIG Securities.
It is comprised of 49 bonds issued by 36 issuers including NextDC, Downer, Crown Resorts, Australian Unity and Virgin which make up 58% of the index.
The Australian corporate bond market has grown by more than 40% since 2010, according to a recent study by Deloitte, but only 16% of high net worth individuals in the country own corporate bonds.
As a result of this growth in recent years however, Australian investors are looking to bonds to deliver reliable returns and protect their portfolio in ways that equity products and property cannot.
Timo Pfeiffer (pictured), chief markets officer at Solactive, commented: “The Australian corporate bond market is around 70% the size of the listed share market (ASX).
“This index is specifically designed for benchmarking purposes to facilitate investors’ decision-making processes around high yield bonds and drive awareness for this publicly less recognised asset class.”