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Betashares Australian Major Bank Subordinated Debt ETF (BSUB)

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Question asked 11/05/2024

Betashares Australian Major Bank Subordinated Debt ETF (BSUB)

Hi MM, Obviously, it’s very new with virtually no trading history, but can we please get your views on BSUB both from a yield perspective and with regards to investing to try and achieve some level of capital gain over time. Is BSUB an ETF that MM might consider for its income portfolio? If so, and in any event, what would be MM’s strategy for investing in this ETF, including in regard to timing when to buy and sell the ETF - perhaps with a view to investing if and when a higher yield presents itself? Thanks, Darren

Answer

Hi Darren,

You like to test us, the BSUB ETF has only been trading for 3-days!

For subscribers not familiar with the Australian Major Bank Subordinated Debt ETF it objectives are as follows:

Earn attractive monthly income from high quality subordinated bonds issued by the ‘big 4’ Australian banks.

The Fund’s strategy is to invest in Tier-2 floating rate subordinated bonds denominated in Australian dollars, issued by the ‘big 4’ Australian banks. Eligible bonds must have amounts outstanding of at least $500 million and a remaining maximum term to maturity of 10 years. The fund will hold between 10 and 16 securities.

They will pay income monthly
Mgt Fees & costs are 0.29%.

We like tier 2 bank bonds at current levels and this ETF looks interesting, however, we would prefer fixed rate bonds at this point in the interest rate cycle.

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