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BetaShares Australian Bank Senior Floating Rate Bond ETF

Fund Manager: Betashares
Inception Date: Jun 06, 2017

New types of bond ETFs are emerging as markets anticipate the interest rate cycle will turn northwards next year. ETFs that capitalise on this momentum are likely to become increasingly popular. One of the most recent innovations in this market has been the introduction of floating-rate bond ETFs, which have their interest payments reset at regular intervals to reflect rises or falls in benchmark interest rates. "This means income received should be expected to increase should interest rates rise, with the reverse also being true. In addition, the capital value of these bonds is much less sensitive to changes in market interest rates compared to fixed-rate bonds," says Ilan Israelstam, head of strategy at BetaShares.   [More]

In our last post, we looked at the new Cash ETFs opening up choice to investors. In this post, we stick to a similar space on the risk/return scale and look at some of the recent additions to the fixed interest space. Unlike cash, the ETF options available to investors in the fixed interest space was already fairly broad, with investors able to invest in corporate bonds, government bonds, global bonds, emerging market bonds, etc. With 19 ETFs now available on the ASX focusing on this space, i ... [More]

BetaShares launches Australian floating rate ETF

ETF Strategy UK - Jun 08, 2017

Aussie ETF provider BetaShares has launched the first ETF in Australia to offer exposure to Australian Bank floating rate bonds. The BetaShares Australian Bank Floating Rate Bond ETF (ASX: QPON) gives investors monthly income with the relative capital stability of floating rate notes. .QPON invests in a portfolio of some of the largest and most liquid floating rate bonds issued by Australian banks. The fund holds 20% of its assets in floating rate bonds issued by each the big four Australian banks (ANZ Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac), with the remaining 20% invested in bonds issued by the large ‘regional’ banks, including Macquarie Bank and AMP Bank. [More]

Australian manager of exchange trade funds (ETFs), BetaShares has launched the Australian Bank Senior Floating Rate Bond ETF (QPON), aimed to offer investors income paid monthly and diversification benefits. QPON, which would be the first ETF in Australia offering exposure to a diversified portfolio of bank floating rate bonds in one trade on the Australian Securities Exchange (ASX), would invest in a portfolio of some of the largest rate bonds issued by Australian banks. [More]

Most investors hold bank shares and deposits, which book-end a rich capital structure. Yet few have exposure to the assets that reside in between — including senior bonds, subordinated bonds, hybrids and securities like AAA rated "covered bonds", which rank ahead of, and are actually safer than, wholesale deposits. Years ago my team developed a plan to launch a passive exchange traded fund (ETF) that would invest in senior-ranking, floating-rate notes issued by Australia's top banks. The idea was to furnish punters with a liquid and divisible medium through which to access the superior interest rates on offer in the $1.6 trillion unlisted bond market, which trades in minimum $500,000 parcels. We shelved the plan because the economics did not stack up for an active manager. [More]

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