New Australian Government Bond ETFs
Stay ahead of the curve with our three forthcoming Australian government bond ETFs, each targeting a distinct maturity bucket within the yield curve.
‘Playing’ the yield curve is one way bond investors can add relative value to their bond portfolio. They can do this by buying bonds at specific maturity buckets in anticipation of changes to the shape of the yield curve. VanEck’s new ETFs provide investors with a way to do this.
- VanEck 1-5 Year Australian Government Bond ETF (ASX code: 1GOV)
- VanEck 5-10 Year Australian Government Bond ETF (ASX code: 5GOV)
- VanEck 10+ Year Australian Government Bond ETF (ASX code: XGOV)
Targeting different parts of the yield curve
VanEck’s three new ETFs will help investors target those parts of the curve that exhibit the greatest differences in volatility.
Chart 1: Australian government bond yield curve
Source: VanEck, 31 August 2023. Yield measures are not a guarantee of future dividend income from the funds.
Defensive characteristics
Each ETF will be a portfolio of Australian government and semi-government bonds. The Australian Government and its state and territories’ treasury corporations are highly rated, and their bonds generally offer capital stability in periods of significant equity market weakness.
Income and yield premium
Each ETF has the potential to provide steady and reliable income, paid monthly.
1GOV - Targeted access to the short-end of the curve
Access to a portfolio of Australian government bonds which have maturity dates between 1 and 5 years.
5GOV - Targeted access to the mid-end of the curve
Access to a portfolio of Australian government bonds which have maturity dates between 5 and 10 years.
XGOV - Targeted access to the long-end of the curve
Access to a portfolio of Australian government bonds which have maturity dates between 10 and 20 years.
Table 1: Underlying index metrics
|
|
1GOV |
5GOV |
XGOV |
|
Years To Maturity |
2.97 |
7.57 |
12.41 |
|
Yield To Maturity |
3.92 |
4.14 |
4.45 |
|
Modified Duration |
2.77 |
6.75 |
9.86 |
Source: S&P, as at 31 August 2023. 1GOV is S&P/ASX Government Bond 1-5 Year Index, 5GOV is S&P/ASX Government Bond 5-10 Year Index, XGOV is S&P/ASX Government Bond 10-20 Year Index. You cannot invest in an index. Past performance is not illustrative of future performance. Yield measures are not a guarantee of future dividend income from the funds.
Published: 08 September 2023
This information is prepared in good faith by VanEck Investments Limited ACN 146 596 116 AFSL 416755 (‘VanEck’) as responsible entity and issuer of units in VanEck ETF’s traded on the ASX. Units in 1GOV, 5GOV and XGOV are not currently available. These funds have been registered by ASIC and are subject to ASX and final regulatory approval. The Product Disclosure Statement and Target Market Determination for each fund will be available at vaneck.com.au. You should consider whether or not any VanEck fund is appropriate for you. Investing in ETF’s has risks, including possible loss of capital invested. See the relevant PDS for details. No member of the VanEck group guarantees the repayment of capital, the payment of income, performance, or any particular rate of return from any fund.
