BetaShares has launched the BetaShares Australian Investment Grade Corporate Bond (CRED) exchange-traded fund (ETF) today to simplify access to the $1 trillion Australian corporate bond market.
The ETF provider said CRED is designed to provide investors with exposure to a portfolio of investment-grade, fixed-rate Australian corporate bonds.
The launch of CRED comes in response to continued investor demand for fixed income ETFs, which received over $360 million of inflows in the first four months of 2018, according to the “BetaShares Australian ETF Review April 2018”.
As at 31 May, the portfolio of bonds in the index tracked by CRED would have provided a yield-to-maturity of around 4 per cent a year, versus a yield-to-maturity of 2.6 per cent a year from the benchmark Australian Composite Bond Index.
CRED provides a monthly income, which is expected to exceed the income paid on cash, term deposits, government and composite bond exposures.
BetaShares chief executive Alex Vynokur said: “The majority of fixed income indices tend to adopt a market capitalisation approach. While it is well understood and accepted in equities, in the case of fixed income it means that companies are rewarded by receiving the highest allocation of investor capital simply by issuing more debt.
“CRED on the other hand invests in a portfolio of investment-grade corporate bonds based on the income returns that those bonds are generating.”
