Betashares launches fixed income ETFs

Betashares has launched three fixed income ETFs, designed to replicate the characteristics of traditional bonds.

The three products - Betashares 2028 Fixed Term Corporate Bond Active ETF (ASX:28BB), 2029 Fixed Term Corporate Bond Active ETF (ASX:29BB) and 2030 Fixed Term Corporate Bond Active ETF (ASX:30BB) - began on the ASX's AQUA market on May 2.

The ETFs provide exposure to investment-grade Australian corporate bonds held until maturity in May 2028, 2029, and 2030 respectively.

The responsible entity, Betashares Capital, intends for the ETFs to terminate on or about the end date of the relevant maturity range of the corporate bonds in the portfolio. Following termination, each fund will distribute its remaining net assets to unitholders.

The ETFs are designed to mimic the characteristics of traditional bonds by making regular income payments and have a fixed maturity date. They aim to make monthly distribution payments.

In launching the range, Betashares said traditional fixed income ETFs and bond funds have been instrumental in opening access to the wholesale bond market.

"However, they often fail to replicate the certainty of outcomes and income profile of holding an individual bond to maturity. This has led many investors to fall back on other investment products, such as term deposits and term annuities. These may offer more certainty, but often lack flexibility, or in the case of term deposits, competitive yields," Betashares said.

The ETFs invest in a range of corporate bonds of fixed maturities, allowing investors to manage their allocation to fixed income by investing in funds that will terminate at equally spaced intervals in an investment strategy known as "bond laddering".

The three ETFs charge 0.22% per annum based on their respective net asset value.