iShares rounds out fixed income ETF suite in Australia

From

Christian Obrist

iShares has listed two fixed income ETFs – iShares Yield Plus ETF (Ticker: IYLD) and iShares Core Corporate Bond ETF (Ticker: ICOR) – on the ASX to provide Australian investors a low-cost access point to a diversified portfolio of high-quality Australian investment grade corporate bonds. The addition of the two funds complements the broader iShares fixed income ETF suite, offering Australian investors increased flexibility to optimise fixed income allocations in portfolios.

The iShares Yield Plus ETF seeks to produce stable, predictable returns to meet investors’ demand for capital preservation and liquidity while maximising yield. At the same time, the fund offers investors portfolio diversification benefits, through the exclusion of Australia’s major banks, implemented via a highly diversified portfolio of securities. It carries a 0.12% per annum management fee and targets a 0.75%-1.0% yield margin over the RBA cash rate, replicating the performance of its customised benchmark, the BACCREX4. The Fund provides monthly distribution payments and provides for daily liquidity.

The iShares Core Corporate Bond ETF, benchmarked to the Bloomberg AusBond Credit 0+ Yr Index, seeks to provide an attractive, reliable income stream for fee-conscious investors. The fund carries a 0.15% per annum management fee and gives investors the opportunity to tap into stable income from a highly diversified portfolio of high-quality Australian corporate bonds.

Applying BlackRock’s baseline screens, both funds explicitly exclude issuers involved in controversial weapons, civilian firearms, fossil fuels, tobacco and UN compact violators. The screens are reviewed on an annual basis to ensure continued relevance as investors’ needs evolve over time.

Christian Obrist, Head of iShares, Australasia said:“During periods of heightened market volatility, we have seen Australian investors deepen their usage of fixed income ETFs as key building blocks to construct resilient portfolios, whether it is for income generation, capital preservation, or as diversification from equities.

“We’re excited to add iShares Yield Plus ETF and iShares Core Corporate Bond ETF to our existing fixed income ETF suite, particularly in the current backdrop of ultra-low interest rates and reduced equity dividends. We believe investors are set to benefit from the broadening of cost-effective, liquid investment choices in our ETF product range as the two funds aim to meet investors’ demand for diversified sources of income.

iShares rounds out fixed income ETF suite in Australia Launches iShares Yield Plus ETF and iShares Core Corporate Bond ETF Expanding liquid, transparent income-focused solutions for Australian advisers and retail investors  “Designed with investors’ needs in mind, both funds aim to provide attractive, stable income streams via exposure to a diversified portfolio of high-quality Australian investment grade corporate bonds. Investors will also benefit from investing in institutional quality ETFs that meet daily liquidity and transparency demands.”

Pioneered by iShares in 2002, fixed income ETFs empower all types of investors to build robust portfolios to meet their investment objectives such as income and portfolio diversification as well as capital preservation. Investors have increasingly turned to fixed income ETFs for their rich diversity of exposures and good value. In 2019, fixed income ETFs eclipsed $1 trillion USD globally1 with iShares fixed income ETFs accounting for over 47% of these assets at year end and $112 billion USD in flows. In Australia, fixed income ETFs assets surpassed $8 billion AUD as at 30 April 20202 , and the iShares Core Composite Bond ETF (Ticker: IAF) continues to see strong interest with over $100 million AUD inflows year to date, as at 26 May 2020.

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[1] iShares flows and AUM figures sourced by BlackRock as of December 31, 2019. Industry data is captured from a number of sour ces by BlackRock, including provider websites, fund prospectuses, provider press releases, provider surveys, Bloomberg, the National Stock Exchange, Strategic Insight Simfund, and Wind. Flows are derived using daily net asset values and shares outstanding using the most recent data we can capture at month-end. iShares ETFs saw global net inflows of $184.644bn in 2019.
[2] Data from ASX landscape report: https://www.asx.com.au/documents/products/ASX_Investment_Products_April_2020.pdf

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