CRED is a ~$1.8bn ASX-listed ETF investing in investment-grade Australian corporate bonds, designed to deliver higher income (currently ~5.1%) than government bond funds, with 100% of the portfolio in fixed rate debt.
This ETF comes with greater credit risk and sensitivity to corporate spreads, and recent concerns around private credit could be having an impact here. When credit risks rise across the market, investors demand higher yields on corporate debt, which pushes bond prices, and ETFs like CRED lower, even when issuers remain investment grade.
NB: CRED does not have exposure to private credit, holding only Australian dollar-denominated corporate bonds, subordinated bonds, inflation-linked bonds, asset-backed securities & convertible bonds.
- We like the CRED ETF, but it feels too early to increase exposure further – MM owns the CRED ETF in its Core ETF Portfolio.
