Coolabah Capital Investments has listed the Coolabah Global Floating-Rate High Yield Complex ETF (CBOE: YLDX).
It aims to generate higher income than other traditional fixed income investments by investing in a floating-rate portfolio of investment-grade bonds and hybrid securities issued predominately by global banks and insurers and enhancing the yields (or interest-rate) through the use of gearing.
Coolabah says the Fund invests in a portfolio of investment grade senior and Tier 2 bonds and cash securities issued in G10 currencies by bank and insurers. It has the capacity to invest in government bonds, corporate bonds and hybrid securities.
The fund targets an interest rate duration exposure of less than 3 months by investing primarily in short-term deposits and floating-rate debt securities, also known as Floating-Rate Notes or Floating-Rate Bonds. FRNS are a type of bond that pay an interest (or coupon) rate which moves up and down with changes in a recognised reference interest rate. The interest (or coupon) rate is the sum of the reference rate and a spread or margin. In Australia, they generally track the returns of the RBA’s cash rate plus a spread or margin and generally have a low or near-zero interest rate risk.
The fund may also invest in fixed-rate bonds with maturities greater than 12 months provided the interest rate is hedged to floating.
Also read: MA Credit Income Trust lists on the ASX
YLDX is currently offering a running yield of 7.6% p.a. before fees with an average portfolio credit rating of A+, compared to major bank hybrids which are offering a yield of 7.3% p.a. with a BBB credit rating. (As of 21/2/25.)
Coolabah three other ETFs include the Coolabah Short Term Income Fund (Managed Fund) (FRNS), the Coolabah Active Composite Bond Fund (Hedge Fund) (FIXD), and the Betashares Active Australian Hybrids Fund (Managed Fund) (HBRD).
