What MM’s favourite ASX Bond ETF?
Hi there! What's your thoughts on the best ASX Bond ETF? Thanks Kim
Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi there! What's your thoughts on the best ASX Bond ETF? Thanks Kim
Hi Kim,
The answer to this question is determined by which bonds an investor wants exposure to, we hold an ASX traded bond ETF in both of our Active Income & Global Macro ETF Portfolios but they are very different:
1 – For local bonds we are long the BetaShares Australian Composite Bond ETF (OZBD), this ETF holds investment grade corp. bonds, govt. bonds and govt-related supranational bonds with AA credit rating, i.e. it is high quality and a nice mix in our opinion. This ETF has a running yield of 3.13% and a yield to maturity of 4.74% with potential capital gains inversely correlated to Australian bond yields.
2 – For US bonds we hold the BetaShares Treasury Bond 20+year ETF (GGOV), this currency hedged ETF aims to track the S&P US 20+ year treasury Bond index, in other words we need US bond yields to turn lower for us to enjoy this position.
However, there are are a smorgasbord of alternatives all with little slight nuances, I’m sure over the coming 12-months we will consider at least one of the ASX’s two goliaths which combined have a market cap in excess of $3.2bn and both are linked to the price of Australian bonds i.e. bulls want yields to fall.
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