Betashares has announced the launch of a range of fixed income ETFs that deliver predictable monthly income with a defined maturity date.
The Betashares Defined Income Bond ETFs are designed to meet the needs of income-focused investors seeking greater predictability in cash flow and capital return. The new funds combine the traditional features of a single bond held to maturity – including regular payments and a set end date – with the diversification, flexibility, liquidity, and transparency benefits of the ETF structure.
Each ETF in the Defined Income Range holds a diversified portfolio of investment-grade Australian corporate bonds that mature in the 12 months leading up to a specific date (e.g. May 2028, 2029 or 2030). Investors receive targeted fixed monthly income payments until the Fund’s maturity date, at which point investors receive the value of their units, mirroring the experience of holding an individual bond to maturity. Like any ETF, investors have the flexibility to buy or sell any time prior to maturity.
Defined Income ETFs are widely adopted by investors in other countries, like the United States, where they are often used as an alternative or complement to term deposits and fixed term annuities as a way to boost income without having to lock up capital. For Australian investors, the funds are expected to be particularly topical amid moves by the Reserve Bank of Australia to reduce policy rates as inflation moves back into the target band – in this climate, the yields on cash are expected to fall in line with reductions in the cash rate.
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Betashares is the largest provider of cash and fixed income ETFs in Australia and has launched many firsts for the market – including ETFs covering high interest cash, floating rate notes, Australian corporate bonds, and now defined income ETFs.
Betashares CEO, Mr Alex Vynokur, said the Defined Income ETF range is an innovative, Australian first that will help investors boost their income, while also providing more predictability over the return of capital at maturity date.
“Australian investors are known for their love of higher income yields from their portfolio, and our new range of Defined Income ETFs will assist with this goal,” Mr Vynokur said.
“Over the last decade, Betashares has been a pioneer in opening more parts of the fixed income universe to investors through the launch of innovative ETFs that offer access to opportunities once the domain of large institutions. Our Defined Income ETFs further this goal by providing investors with predictable, compelling income as well as the liquidity, transparency, and diversification benefits of an ETF.”
