Exchange-traded bonds hit milestone

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The ASX-quoted high-yield corporate bond range, XTBs (Exchange Traded Bond units), has doubled funds under management in the past six months, reaching $200 million.

The milestone coincides with the product’s two-year anniversary. XTBs have attracted increasing demand from self-directed investors, financial advisers, and brokers since launching in 2015.

There are 47 XTBs currently available on the ASX and on 27 leading platforms. A further expansion of the range is due in the coming weeks, according to John McNiven, one of the founders.

“XTBs offer all investors access to returns from individual corporate bonds on ASX and are approved for distribution by 158 Australian dealer groups… They are a real alternative to term deposits for individual investors,” he said last week.

According to the company, they are ASX’s only product with:

  • A risk-return profile close to TDs
  • The same predictability of income & capital payments as TDs
  • Low capital volatility, and
  • Yields generally above TD rates – with some considerably higher than current.

XTB has also unveiled a number of new solutions to make corporate bonds more accessible, including model portfolio SMAs for both financial advisers and investors.

XTB has experienced strong support from across the broader wealth management industry, collaborating with industry luminaries such as Macquarie’s Owners Advisory,

Ord Minnett, Praemium and BondAdviser and entering into an education alliance with online broker Bell Direct to expand access to XTBs.

Richard Murphy, XTB co-founder and chief executive, said: “Doubling FUM within six months is testament to the broadly-held vision across the industry that there’s an enduring need for access on ASX to corporate bonds for all investors. “Before XTBs there was a gaping hole in ASX’s range of individual securities. There was nothing between low-risk Government Bonds and much more capital-volatile hybrids and equities. Corporate bonds are the missing link. They sit just above government bonds and TDs in risk terms, but well below more risky hybrids and equities.

“It’s no wonder so many investors have been sitting on the sidelines in TDs when there was nothing on ASX’s supermarket shelves that met their need for lower-risk, lower volatility and predictable investments, but with returns above TDs.

“The world of XTBs is growing fast on ASX because XTBs plug the gap and stack the once-empty shelves in the corporate bond section of the ASX Supermarket.”

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