BetaShares Active Australian Hybrids Fund (HBRD)
|3 Ways to Boost Your Investment Income|
About this Fund
|FUND MANAGER||Coolabah Capital Investments|
|ASSET CLASS||ACTIVE EXCHANGE TRADED FUNDS|
|INVESTMENT STYLE||The Fund will invest in an actively managed portfolio of hybrid securities, bonds and cash.|
|INVESTMENT PROFILE||The Fund provides investors with a convenient way to access attractive income returns, including franking credits.|
|BENCHMARK||Solactive Australian Hybrid Securities Index|
|FUND SIZE||Solactive Australian Hybrid Securities Index|
|NO. OF HOLDINGS||40-60|
Benefits of investing in the BetaShares Active Australian Hybrids Fund
|RISK LEVEL||Medium risk/return profile|
The product is likely to be appropriate for a consumer seeking regular, tax effective income by providing exposure to Australian hybrid securities, to be used as a small allocation, where the consumer has a medium to long investment timeframe (3+ years), medium risk/return profile and needs daily access to capital.
About the Fund
The Fund provides investors with a convenient way to access attractive income returns, including franking credits, from an actively managed, diversified portfolio of hybrid securities. As the Fund is overseen by a professional investment manager it actively seeks to reduce the volatility and downside risk that may otherwise be experienced by direct holders of hybrids.
How to use this ETF in your portfolio
The Fund can be used to implement a variety of investment strategies. For example:
How we invest your money
The Fund will invest in an actively managed portfolio of hybrid securities, bonds and cash. If and when the hybrids market is assessed to be overvalued or to present heightened risk of capital loss, the Fund can allocate more of the portfolio to lower risk securities, including cash and Australian-issued senior bonds with investment-grade ratings.
Eligible hybrids for the Fund's portfolio include securities that are:
Cash includes bank deposits, negotiable certificates of deposit, treasury notes, commercial paper, senior bonds with less than 12 months to maturity that are eligible for repurchase with the Reserve Bank of Australia, and exchange traded funds (which may include ASX-quoted cash trusts managed by the Responsible Entity) that invest in the foregoing instruments.
The Fund may also invest in Australian-issued senior bonds with investment-grade ratings (including bonds with more than 12 months to maturity), which may include exchange traded funds (including ASX-quoted funds managed by the Responsible Entity) that invest in such bonds.
The Fund will actively aim to identify mispriced securities within the Australian hybrids market that may produce capital gains if and when prices converge towards the Investment Manager's estimates of fair value. This will entail the Investment Manager applying top- down and bottom-up fundamental valuation analysis to both issuers of the securities and the credit quality and structural features of the securities themselves to build an actively managed and diversified portfolio of hybrids that has the best chance of meeting its investment objectives.
The Fund will target holding around 20 to 50 hybrid securities when fully invested, although the actual number may vary from this target. The Fund will retain the ability to invest up to 100% in cash and/or higher-ranking bonds as a defensive measure with the aim of protecting investors' capital in the event it is assessed that hybrids are materially overvalued or that there is an unusually large amount of downside risk in the hybrids market.
The Fund aims to have a weighting below 15% to any individual hybrid security at the time of investment, and a weighting to any single hybrids issuer below 25% where the issuer is a "Big 4 bank (ANZ, Commonwealth, Westpac or National Australia Bank), below 15% where the issuer is another bank and below 10% where the issuer is not a bank.
The Fund will seek to minimise the interest rate duration risk associated with conventional fixed-income funds by investing in securities that are floating-rate or, if they are fixed-rate securities, by hedging that interest rate risk. This means that the Fund will aim to produce higher income returns when interest rates increase with less resulting impact on the prices of its floating-rate securities.
With a conventional fixed-rate bond, as interest rates increase the price of the bond declines to give a higher effective yield from its fixed income payments. In contrast, a floating-rate security typically pays a variable interest or income distribution that is linked to a variable reference rate and the floating-rate security can therefore pay a different amount on each interest or income payment date. As a result, movements in interest rates can be expected to have a lower impact on the prices of floating-rate securities, when compared to fixed-rate bonds.
The Fund will not use leverage or gearing to seek to enhance its returns.
Derivatives may only be used for hedging purposes, such as hedging currency risk on any hybrid securities issued overseas by Australian issuers or hedging interest rate duration on any securities held in the portfolio.
The assets of the Fund, whether hybrid securities, bonds or cash, will be held by the Fund's custodian, other than cash held as collateral for any derivative positions.