VanEck SUBD ETF (ASX:SUBD)

VanEck Vectors Australian Subordinated Debt ETF

Domestic

About the SUBD ETF

VanEck Vectors Australian Subordinated Debt ETF SUBD invests in a portfolio of subordinated bonds with the aim of providing investment returns before fees and other costs that track the performance of the index. The ETF is managed VanEck, pays monthly dividends and first traded in October 2019.

Subordinated bonds pay coupons (interest) that vary with short-term interest rates and interest rates are reset periodically resulting in reduced duration (interest rate risk). The higher risk associated with subordinated bonds means they pay a higher yield.

SUBD ETF Performance Review

7.14

3.09

2.94

6.24

5.97

Data Current To: 31/12/2023

Our review of SUBD ETF

Invests in a portfolio of investment grade subordinated bonds, over 90% allocation to banks and the balance insurance companies

Only invests in AUD denominated floating rate bonds issued by financial institutions that qualify as Tier 2 Capital under APRA's Rules (or equivalent foreign rules)

Short duration with virtually no interest rate risk

What we like about the SUBD ETF

Monthly income

Minimal interest rate risk as the securities are floating rate.

Things to be aware of about the SUBD ETF

Long average term until maturity with approximately 60% of the portfolio maturing in more than seven years

Relatively high fees for a concentrated portfolio

Concentrated, only 25 holdings as at 31 December 2023

SUBD ETF Investment Strategy

Offering a higher yield relative to cash, term deposits and traditional bonds for a slightly elevated risk

What does the SUBD ETF Invest In?

SUBD is a Corporate Bond ETF.

SUBD ETF tracks the iBoxx AUD Investment Grade Subordinated Debt Mid Price Index. The Index is designed to reflect the performance of investment grade subordinated bonds denominated in AUD.

The index only includes AUD denominated floating rate bonds issued by financial institutions that qualify as Tier 2 Capital under APRA's Rules (or equivalent foreign rules), and which hold an iBoxx credit rating of investment grade.

As at 31 December 2023, the ETF had 25 different holdings including securities issued by ANZ Banking Group, Commonwealth Bank of Australia and Macquarie Bank.

SUBD ETF Credit Quality

The average credit quality of the SUBD ETF is BBB.

A detailed breakdown of the credit quality is expressed below.

SUBD Frequently Asked Questions

What index does the SUBD ETF aim to replicate?

The SUBD ETF aims to replicate the iBoxx AUD Investment Grade Subordinated Debt Mid Price Index.

How often does SUBD ETF pay distributions?

The distribution frequency of SUBD is Monthly.

When did the SUBD ETF start?

The inception date of the SUBD ETF was 28/10/2019.

What are the net assets of the SUBD ETF?

SUBD has net assets of $1200m (AUD) as of 31/12/2023.

What are the number of holdings in the SUBD ETF?

Total number of holdings in SUBD is 25 as of 31/12/2023.

What are the management fees for the SUBD ETF?

The annual management fees for the SUBD ETF are 0.29% p.a. Learn more about ETF fees in this article.

How can I invest in the SUBD ETF?

SUBD is an Exchange Traded Fund, and units may be bought or sold on the ASX like shares. Learn how to buy and sell ETFs in this article.

Does the SUBD ETF have a minimum investment amount?

No, there is no minimum to invest in the VanEck SUBD ETF. Exchange Traded Funds in general do not have a minimum investment amount required by the issuer. However, if you choose to invest through a broker, they may choose to set their own minimum investment amount.

Are there any performance fees associated with the SUBD ETF?

No, SUBD has no performance fee. This is one of the advantages of Exchange Traded Funds, as they are traded like shares, you’ll generally only pay a commission to buy or sell units and an ongoing management fee.