BetaShares announced the launch of the BetaShares Australian Government Bond ETF -adding to its stable of fixed income products.
The Australian Government Bond ETF (ASX: AGVT) aims to track the performance of an index that provides exposure to a portfolio of high-quality, income-producing bonds issued primarily by Australian federal and state governments.
The ETF also tracks a component issued by supranationals, sovereign agencies and similar organisations.
BetaShares said the AGVT Index is currently providing an income return higher than traditional Australian government bond benchmarks.
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The index has been shown to outperform comparable indices on a total return basis by approximately 1.5% per annum over the last 10 years.
BetaShares chief executive Alex Vynokur said: "This is our first product that offers specific exposure to government bonds, a category that enjoys the highest level of investor security within the Australian bond market."
He explained that because Australian government bonds are considered an extremely secure asset, AGVT could be considered an attractive option for many portfolios.
"Government bonds are a core part of a balanced portfolio given their historical negative correlation to equities and high level of stability relative to corporate bonds," Vynokur said.
"Australian government bonds are considered to be an important 'safe-haven' asset class for investors and their advisers, and we are excited to deliver another compelling, cost effective fixed income investment solution to the market."
According to the monthly BetaShares Australian ETF Review, fixed income ETFs registered net flows of $1.16 billion in the first five months of this year - putting flows on par with international equities ETFs.
Vynokur said BetaShares has seen an increase in interest in its fixed income range as investors become increasingly wary of the late cycle bull market in equities.
"The strong flows in the fixed income category have also been assisted by the growth in investment options now available on the ASX, which we expect to continue to develop as the market matures and investors increase their portfolio allocations to bonds," Vynokur said.
BetaShares' cash and fixed income range has a total of approximately $2.35 billion in assets under management.