BANK, which will be made available later this month and marks Global X’s 40th listed ETF, tracks the performance of the Solactive Australian Bank Credit Index.
According to Global X, the fund is Australia’s first “three-in-one” passively managed package of senior bonds, subordinated bonds and hybrid securities, and the only index-based ETF offering exposure to the broader capital stack of Australia’s banks in one diversified solution.
Marc Jocum, Global X product and investment strategist, said the fund is designed for investors seeking consistent income, capital preservation and increased resilience in their portfolios.
“Our first-of-its-kind product offers attractive yields and convenient portfolio diversification. Set at a competitive annual management fee of 0.25 per cent, it combines stability, regular income and the familiarity of hybrid securities, which have historically been popular with financial advisers and their clients thanks to their quarterly income and franking credits,” Jocum said.
According to the firm, fixed income ETFs captured 43 per cent – or $6.5 billion – of total net flows in 2023, with the majority going into Australian fixed income ETFs.
Expounding on the growth seen in fixed income ETF flows in 2023, chief executive Evan Metcalf said: “Fixed income ETFs have experienced a remarkable period of growth in Australia over the past year”.
“The largest portion of these flows have been directed towards widely diversified solutions and ETFs focusing on floating rate notes, such as subordinated debt,” Metcalfe said.
“This trend has shown the widespread impact rising interest rates have had on local investor sentiment, sparking an increased desire to reduce the duration of portfolios and seek out appealing yields.
“With a growing appetite for more short-term fixed income ETFs in the Australian market, our ambition for BANK is to take advantage of this untapped potential, as we aim to target a duration of one to two years and a yield of 5 to 7 per cent.”
Last week, Global X announced the launch of Global X FANG+ (Currency Hedged) ETF (ASX: FHNG), offering local investors exposure to companies at the forefront of “next-generation” technology with minimised exchange rate risk.
FHNG, Global X clarified, is the currency hedged version of the Global X FANG+ ETF (ASX: FANG), which was launched in 2020 and holds more than $645 million in net assets.
Australia’s ETF market hit an all-time record, surpassing $200 billion assets under management at the end of June.
Earlier this week, Global X noted that while it took the ETF market nearly 20 years to reach the initial $100 billion, the next $100 billion was achieved in just over three years.
“ETF net flows so far for 2024 have marked the best start to the year ever for the Australian market,” the firm said.
