5GOV invests in a portfolio of Australian dollar denominated Australian Government Bonds with maturity dates between 5 and 10 years with the aim of providing investment returns, before fees and other costs, that closely track the returns of the Index.
The Ardea Real Outcome Bond Complex ETF is a defensive fixed income solution that targets a stable return in excess of inflation over the medium term. The Fund primarily uses government bonds to create a diversified portfolio of high quality fixed income securities that seeks to prioritise liquidity and capital preservation.
The Fund aims to provide investors with the performance of the ICE U.S. Treasury Core Bond AUD Hedged Index, before fees and expenses. The index is designed to measure the AUD hedged performance of the U.S. Treasury bond market.
AGVT aims to track the performance of an index (before fees and expenses) that provides exposure to a portfolio of high-quality bonds issued by Australian federal and state governments, and with a component issued by supranationals and sovereign agencies.
The High Yield Fund offers fixed income credit products otherwise not available to retail investors, targeting capital stable higher yielding assets.
The Global X Australian Bank Credit ETF (BANK) is an index-based ETF that invests in a diversified portfolio of Australian banking debt across the full capital structure excluding shares. It comprises fixed and floating-rate bonds, senior and subordinated debt (Tier 2 Capital), and hybrid securities (Additional Tier 1 Capital)
PLUS invests in a diversified portfolio of Australian dollar denominated bonds. The corporate bonds which PLUS invests in are predominantly the highest yielding investment grade corporate bonds issued in Australia. This fund aims to provide investment returns, before fees and other costs, which track the performance of the Index.
The fund aims to provide investors with the performance of the Bloomberg AusBond Composite 0+ Yr IndexSM, before fees and expenses. The index is designed to measure the performance of the Australian bond market and includes investment grade fixed income securities issued by the Australian Treasury, Australian semi-government entities, supranational and sovereign entities and corporate entities
Invest in bonds that potentially pay higher income.
Vanguard Australian Corporate Fixed Interest Index ETF seeks to track the return of the Bloomberg AusBond Credit 0+ Yr Index before taking into account fees, expenses and tax.
CRED aims to track the performance of an index (before fees and expenses) that provides intelligent exposure to a portfolio of senior, fixed-rate, investment grade Australian corporate bonds.
The fund aims to provide investors with the performance of an index before fees and expenses that is designed to measure the AUD hedged performance of fixed rate, high yield corporate bonds across global developed markets.
The Fund is designed to be a core portfolio allocation for fixed income. It aims to track the performance of the Bloomberg Global-Aggregate Total Return Index Hedged AUD (before fees and expenses). The index is a flagship measure of fixed-rate global investment grade debt from global bond markets, hedged into Australian dollars. The Fund currently obtains its exposure via an underlying ETF (refer to the PDS for more information).
Betashares Geared Long Australian Government Bond Complex ETF offers geared exposure to the returns of 10-year Australian Treasury Bonds, in a single ASX trade.
The Gryphon Capital Income Trust (ASX Code: GCI) is a listed trust designed to provide investors with sustainable, monthly income (Target Return equal to RBA Cash Rate +3.50% pa) through exposure to the Australian Securitisation market.
Bond investing is a fundamental part of the fixed-income securities market.
It involves purchasing debt instruments issued by governments, municipalities, and corporations.
Bond investing involves buying bonds to earn interest income and, potentially, to achieve capital appreciation.
A bond is essentially a loan made by an investor to a borrower (the issuer), who promises to pay back the principal amount at a specified maturity date, along with periodic interest payments, known as coupon payments.
There are several types of bonds, including:
The three main features of Bond investing are:
There are four main risks of Bond investing:
Investors can evaluate Bonds using several criteria:
Investors can invest in Bonds through various avenues:
It varies by bond type; some can be purchased for as little as $1,000.
Bond funds can be less risky than individual bonds due to their diversification benefits, but they can also be affected by market volatility.
Many brokerage platforms allow for the automatic reinvestment of interest payments.
Bond ratings are assessments of the creditworthiness of a bond issuer, ranging from AAA (highest quality) to D (default).
Higher-rated Bonds are generally considered safer, while lower-rated bonds may offer higher yields but come with increased risk.
Yield is the income return on an investment, typically expressed as a percentage.
For Bond investors, yield can refer to the coupon yield, current yield, or yield to maturity (YTM), which considers total returns if the bond is held to maturity.
Diversification in Bond investing can be achieved by investing in bonds with different maturities, credit qualities, and types (government, municipal, corporate).
This helps spread risk and can moderate the impact of interest rate fluctuations.
Inflation erodes purchasing power, which can negatively impact upon the real returns on bonds.
To mitigate this risk, Bond investors may look for inflation-protected securities, like TIPS (Treasury Inflation-Protected Securities).
A Bond’s face value (or par value) is the amount paid back to the bondholder at maturity, whereas a Bond’s market value is the current price at which the Bond can be bought or sold in the market, which can fluctuate based on interest rates and issuer credit quality.
In summary, Bond investing provides a relatively stable income source with a lower level of risk compared to equities.
Understanding the types, features, and risks of Bond investing is essential for making informed investment decisions.
By comparing key metrics such as yield, credit ratings, and utilising diversified strategies like Bond funds, investors can optimise their bond portfolios effectively.
As market conditions evolve, staying informed and adapting investment strategies is crucial for successful Bond investing.
