ETF Securities has announced an expansion to its fixed income product lineup with the launch of two new bond ETFs on the ASX.
According to the firm, the ETFS US Treasury Bond (Currency Hedged) ETF (ASX: USTB) is the first pure play exposure to US Treasuries available to retail investors in Australia.
USTB tracks the iBoxx $ Treasuries Total Return Index, hedged into Australian dollars.
This index is market capitalisation weighted and tracks the performance of bonds issued by the United States government. USTB gains its exposure to the index by investing in the Xtrackers II US Treasuries UCITS ETF 1D from global fund manager DWS Group.
Meanwhile, the ETFS USD High Yield Bond (Currency Hedged) ETF (ASX: USHY) tracks the Solactive USD High Yield Corporates Total Market Index, hedged into Australia dollars. USHY gains exposure by investing in DWS Group’s Xtrackers USD High Yield Corporate Bond ETF.
ETF Securities head of product, Evan Metcalf, suggested that the ETFs were suited to investors who were seeking peace of mind and low-risk asset classes such as retirees and SMSFs.
“Fixed-income securities play an important role in investment portfolios. Their returns generally have a low correlation to equity returns, which provides portfolio diversification,” he said.
“And over time, they have low volatility. This means they provide yield with relatively low risk. Investors often compare the yield on government bonds to the higher yield on dividends from equities. What they ignore is that to capture that dividend yield, they must invest in an asset class with double-digit annual volatility.”
ETF Securities said that, despite the US$23 trillion market for US government debt, local retail investors had not previously been able to access a pure play investment in US Treasuries.
Last month, the local ETF provider announced it had been acquired by South Korean asset manager Mirae Asset Global Investments and its New York-based subsidiary Global X ETFs.
“We will continue to offer innovative and timely products to the market and this launch marks the start of our new growth strategy, especially in light of Mirae Asset and Global X ETFs acquisition of our business,” said ETF Securities head of distribution Kanish Chugh.
“We are excited to work with Global X ETFs, and to dip into their vast research capabilities and experience. As a leading provider of ETFs we will continue to offer solutions for investors to build portfolios across the spectrum, whether it's defensive, growth, income or alternatives.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
