Betashares launches Australian Major Bank Subordinated Debt ETF

Betashares has introduced the Australian Major Bank Subordinated Debt ETF (ASX: BSUB) on the ASX.

This ETF offers exposure to a portfolio of Tier 2 floating rate subordinated bonds issued by the Australian big four banks.

To be eligible for inclusion in BSUB, bonds must have amounts outstanding of at least $500 million and a remaining maximum term to maturity of 10 years.

Betashares said the Australian major banks are foundational pillars of the local banking system and are considered some of the best capitalised major financial institutions globally.

"Generally, Tier 2 floating rate subordinated bonds offer attractive income potential, typically delivering returns above that of senior bank floating rate notes, along with a high degree of capital stability. At the same time, the income paid by these bonds varies in line with benchmark interest rates, offering protection against rising interest rates," Betashares said.

Betashares chief executive Alex Vynokur added that BSUB offers investors "attractive monthly income," a high degree of capital stability, and "potential portfolio diversification benefits" due the historically low correlation of Tier 2 floating rate bonds with equities.

"We're excited to launch BSUB as we continue to broaden the range of investment options available to Australian investors and their financial advisers," he said.

With the launch of BSUB, Betashares' now offers 19 cash and fixed income ETFs with $10.5 billion in funds under management. Over the past 12 months, its received $2.5 billion in net flows into these ETFs from investors.

Betashares said it's now the largest provider of cash and fixed income ETFs in Australia.