New Australian Government Bond ETFs

Australian investors looking to increase their exposure to Aussie government bonds now have three new ETFs to consider for their portfolios.

VanEck has announced it will launch three Australian government bonds: VanEck 1-5 Year Australian Government Bond ETF (1GOV), VanEck 5-10 Year Australian Government Bond ETF (5GOV) and VanEck 10+ Year Australian Government Bond ETF (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.

The company said: ” ‘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.”

Also read: BlackRock iShares to List Low Cost U.S. Treasury ETF

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.

Underlying index metrics