Australia’s First “Three-In-One” Australian Bank Credit ETF

Australia’s First “Three-In-One” Australian Bank Credit ETF

Global X ETFs (Global X) has announced the launch of the Global X Australian Bank Credit ETF (ASX: BANK).

Available in late July 2024, BANK provides exposure to credit in the Australian banking sector, tracking the performance of the Solactive Australian Bank Credit Index (the “Index”). As Australia’s first ‘three-in-one’ passively managed package of senior bonds, subordinated bonds and hybrid securities, BANK is the only index-based ETF offering exposure to the broader capital stack of Australia’s banks in one diversified solution.

Marc Jocum, Product and Investment Strategist at Global X, said BANK is designed for investors seeking consistent income, capital preservation and increased resilience in their portfolios.

“Our first-of-its-kind product offers attractive yields and convenient portfolio diversification. Set at a competitive annual management fee of 0.25 per cent, it combines stability, regular income and the familiarity of hybrid securities, which have historically been popular with financial advisers and their clients thanks to their quarterly income and franking credits,” Jocum said.

Fixed income ETFs captured 43 per cent of the net flows in 2023 ($6.5 billion), the highest trailing 12-month flows on record, with the majority going into Australian fixed income ETFs.1

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Reflecting on this growing phenomenon, Evan Metcalf, CEO of Global X, said, “Fixed income ETFs have experienced a remarkable period of growth in Australia over the past year. The largest portion of these flows have been directed towards widely diversified solutions and ETFs focusing on floating rate notes, such as subordinated debt.

“This trend has shown the widespread impact rising interest rates have had on local investor sentiment, sparking an increased desire to reduce the duration of portfolios and seek out appealing yields.

“With a growing appetite for more short-term fixed income ETFs in the Australian market, our ambition for BANK is to take advantage of this untapped potential, as we aim to target a duration of one-to-two-years and a yield of five to seven per cent.”

BANK represents the 40th listed ETF from Global X and adds to the company’s range of ETFs across thematics, commodities, income and cryptocurrency. Global X now has more than $7.5 billion in assets under management.2

[1] Source: Global X, ASX, Cboe

[2] As at 9 July 2024