Fixed Income

Question 1

AAA

Answer 1

AUS High Interest Cash ETF

Question 2

AAA: Fee & Distribution

Answer 2

0.18% p.a. Distributing Monthly

Question 3

AAA Argument

Answer 3

Convenient way to gain benefits like those that may come from investing in high-interest deposit accounts. Creates returns in excess of the 30-Day BBSW with T+2 liquidity and an NDA enforcing protection over which of the approved banking institutions possess the holdings.

Question 4

QPON

Answer 4

AUS Banks Senior Floating Rate ETF

Question 5

QPON: Fee, Distribution, Rebalancing & Index

Answer 5

0.22% p.a., Monthly Distribution, Quarterly Rebalance, and the Solactive Aus Bank Senior Floating Rate Bond Index.

Question 6

QPON Argument

Answer 6

Low-cost, diversified exposure to AUS bank floating rate bonds.
- >$500M outstanding
- TTM = 1-5 years.
Band 1 (80%) - Big 4
Band 2 (20%) - Regional

Question 7

AGVT

Answer 7

AUS Government Bonds

Question 8

AGVT: Fees, Distributions, Rebalancing, & Index

Answer 8

0.22% p.a.
Monthly Distribution
Monthly Rebalancing
Solactive Aus Government 7-12 Year AUD TR Index

Question 9

AGVT Argument

Answer 9

High quality, income generating long-dated government bonds from the AUS fed/state governments (75%), Supranationals and Sovereign Agencies (25%).
Benefits from an extremely steep positioning on the bond yield curve (7-12 year maturity), offering significant roll yield and hedging benefits.
> $500M issuance.

Question 10

GGOV

Answer 10

Global Government Bond 20+ Year (Currency Hedged)

Question 11

GGOV: Fees, Distributions, Rebalancing and Index.

Answer 11

0.22% p.a.
Quarterly Distribution
Monthly Rebalancing
S&P G7 Sovereign Duration Capped 20+ Year AUD HEDGED Bond Index

Question 12

GGOV Argument

Answer 12

~130 long-maturity G7 issued bonds with remaining TTM > 20 years, weighted by market value with 25% cap on country’s dollar duration contribution to the index. Generally generated higher income potential with performance in periods of equity market weakness (relative to increasing interest rates).

Question 13

CRED

Answer 13

AUS Investment Grade Corporate Bond ETF

Question 14

CRED: Fees, Distribution, Rebalancing and Index

Answer 14

0.25% p.a.
Monthly Distribution
Quarterly Rebalancing
Solactive AUS Investment Grade Corporate Bond Index

Question 15

CRED Argument

Answer 15

Investment grade, fixed-rate corporate bonds offering superior excess returns to AUS government bonds. Offering attractive monthly income, historically negatively correlated with interest rates (equities).
7% issuer cap, no more than 2 per issuer.
>$250M outstanding, TTM = 5.25-10.25 years.
note: Constituents chosen based on E(r) rather than debt outstanding.

Question 16

BNDS

Answer 16

Legg Mason AUS Bond ETF

Question 17

BNDS: Fees

Answer 17

0.42% p.a.

Question 18

BNDS Argument

Answer 18

One-stop, core AUS fixed-income exposure, with active management component to capitalise on traditional index inefficiencies. Holds 10+ year government bonds, holding to ~5 years, aiming to outperform the Ausbond 0+ composite on 3-year rolling periods.
5% sub investment-grade allowance (where opportune).

Question 19

GBND

Answer 19

Sustainability Leaders Diversified Bond ETF (Currency Hedged)

Question 20

GBND: Fees, Distribution, Rebalancing and Index

Answer 20

0.49% p.a.
Quarterly Distribution
Monthly Rebalancing
Solactive AUS & Global Select Sustainability Leaders Bond TR Index.

Question 21

GBND Argument

Answer 21

Fixed-rate bond exposure from a diversified issuance base of investment grade+ bonds. Issuers include Governments, Corporations and Supranationals.
50% AUD denominated Bonds
50% Green Bonds / 50% EUR/USD Denominated Bonds.
10% AUD Issuer cap
5% Other issuer cap.
Negative screens.

Question 22

HBRD

Answer 22

Active Australia Hybrids Fund

Question 23

HBRD: Fees, Distribution and Constituents

Answer 23

0.55% p.a. + 15.5% Outperformance fee.
Monthly Distribution
Holds 20-50. (Up to 50 constituents).

Question 24

HBRD Argument (management, aim, stock caps?)

Answer 24

Actively managed, non-transparent fund by Chris Joye and Coolabah Capital, who actively seek to minimise volatility and downside risk otherwise associated with directly holding hybrids, while seeking attractive franked income.

Managers hold the right to (1) hold up to 100% in cash and (CAPITAL PRESERVATION MANDATE) (2) invest along the capital structure if markets appear overvalued and the methodology includes:

• 25% Big 4 bank issuer cap
• 15% individual stock cap
• 10% Other bank issuer cap
• 10% Non-bank issuer cap.

Minimal interest rate duration. Exposure to floating rate exposures only.
Note: Must maintain a post fee volatility of 3-4%.
MC > $100M, TTM > 1 year.

Outperformance of BBSW + 2.5%
Solactive AUS Hybrid Security Index

Question 25

BHYB

Answer 25

Australian Major Bank Hybrids Fund

Question 26

BHYB: Fees, Index, Distribution, Rebalance and Constituents

Answer 26

0.35%p.a.
Solactive Australian Banking Preferred Shares Index
Monthly Distribution 
Quarterly Rebalance
16 Constituents

Question 27

BHYB Argument (narrative, how)

Answer 27

Given solvency and liquidity are less of an issue for the Big 4 Banks, this is a passive fund that provides exposure to a portfolio of listed hybrid securities issued by the Big 4 Banks

Fully-rule based

• Must be listed on ASX, trading in AUD, a preferred share (type of issuance), >$100 million market cap
• 30% issuer cap but if only 3 or less ultimate issuers, 30% cap replaced by equally weighted cap per ultimate issuer