Russell Investments Australian Select Corporate Bond ETF (RCB)
|Fixed income in 2023: Is a renaissance coming?|
About this Fund
|FUND MANAGER||Russell Investment Management|
|ASSET CLASS||EXCHANGE TRADED FUNDS|
|INVESTMENT STYLE||RGB invests in a portfolio of predominantly investment-grade Australian corporate fixed income securities.|
|INVESTMENT PROFILE||The Fund seeks to match the performance of its Benchmark Index before fees and other costs.|
|BENCHMARK||DBIQ 0-4 year Investment Grade Australian Corporate Bond Index|
|FUND SIZE||DBIQ 0-4 year Investment Grade Australian Corporate Bond Index|
|NO. OF HOLDINGS||Around 10|
Benefits of investing in the Russell Investments Australian Bond ETFs
What are the benefits of ETFs in general?
What are the benefits specific to the Fund?
About the Fund
The Russell Investments Australian Select Corporate Bond ETF (the 'Fund') seeks to track the DBIQ 0-4 year Investment Grade Australian Corporate Bond Index ('the Index') which comprises predominantly investment-grade Australian corporate fixed income securities. The Fund aims to provide exposure to the largest and most liquid Australian corporate bonds, as identified by certain eligibility criteria including minimum credit rating, minimum issuance size and term to maturity. The Fund also aims to deliver diversified risk through equally weighting the securities on reconstitution to ensure that the exposure is not biased towards the largest borrowers.
About the Index
The DBIQ 0-4 year Investment Grade Australian Corporate Bond Index is a fixed income index provided by Deutsche Bank (Index Provider). It is designed to provide investors with an investable exposure to Australian corporate fixed income securities.
The DBIQ 0-4 year Investment Grade Australian Corporate Bond Index starts with a universe of Australian fixed income securities.
A number of filters are applied to the universe to ensure that the eligible fixed income securities are issued by Australian institutions, and have features of (including but not limited to) fixed rate, non-callable, fixed coupon paying terms.
Eligible fixed income securities must achieve a minimum credit rating of A or above from the major rating agencies, in accordance with the Index methodology. Credit ratings for fixed income securities relate to a rating agency's assessment of the creditworthiness of a particular entity's (such as a corporation's) debt issue. A credit rating of investment grade indicates that the ratings agency's view an issuer as likely to meet payment obligations.
The DBIQ 0-4 year Investment Grade Australian Corporate Bond Index then specifically identifies an initial universe of fixed income securities that are credit type securities issued by an entity (i) whose ultimate parent is domiciled in Australia, and (ii) which is listed or has issued a class of its securities that are quoted (or in the case of a fully guaranteed entity, the parent is listed or has issued a class of its securities that are quoted) on the ASX or any other Australian exchange which is a member of the World Federation of Exchanges. The fixed income securities must also have a principal amount outstanding greater than $100 million to ensure sufficient liquidity and a term to maturity (TTM) of between a minimum of 1 year and approximately 4 years. A second universe is then derived to determine the 25th percentile issue size of the initial universe. Only securities greater than this 25th percentile remain. The fixed income securities are then ranked by TTM from longest to shortest and a maximum of ten securities, two fixed income securities per issuer, are selected. If the number of securities is less than ten, then a third fixed income security per issuer is selected according to the longest TTM. It is possible that only fixed income securities issued by the four largest issuers will be eligible for inclusion in the DBIQ 0-4 year Investment Grade Australian Corporate Bond Index.
The fixed income securities are then equally weighted based on market value on the day of reconstitution. The DBIQ 0-4 year Investment Grade Australian Corporate Bond Index is reconstituted quarterly, with the above rules applied and equal weighting occurring on reconstitution. The weighting of the individual fixed income securities is likely to vary in between reconstitutions based on price movements.
Coupons received from the constituents are to be reinvested back into the relevant security or securities.
As at the date of the PDS, the DBIQ 0-4 year Investment Grade Australian Corporate Bond Index includes fixed income securities issued by the four largest banks in Australia and a non-financial corporation. The underlying DBIQ 0-4 year Investment Grade Australian Corporate Bond Index constituents may change in the future in line with the Index methodology.
More details about the characteristics of the DBIQ 0-4 year Investment Grade Australian Corporate Bond Index are available at: http://index.db.com.
How we invest your money
The Fund seeks to track the performance of DBIQ 0-4 year Investment Grade Australian Corporate Bond Index by investing predominantly in Australian corporate fixed income securities. The DBIQ 0-4 year Investment Grade Australian Corporate Bond Index filters the largest and most liquid corporate fixed income securities and weights them equally upon reconstitution. Derivatives may also be used to a limited extent to obtain or reduce exposure to such securities.
We will not significantly change the Fund's investment strategy as described in this PDS unless the change has been approved by a resolution of Unitholders passed by at least 75% of votes cast on the resolution.
A Fund may use bond and bond index futures contracts that are listed on the Sydney Futures Exchange to give cash holdings market exposure in order to achieve a desired investment position without buying or selling the underlying assets. Futures usage will generally be limited to a maximum of 5% of a particular Fund's value at any time. Derivatives will not be used speculatively or to leverage a Fund.