The Betashares Ethical Australian Composite Bond ETF (ASX: AEBD) provides exposure to a diversified portfolio of high quality Australian corporate and government bonds. Bonds are selected to exclude issuers, other than sovereign bond issuers, with significant exposure to fossil fuels or engaged in activities considered inconsistent with responsible investment considerations.
The fund is the latest addition to Betashares’ range of ethical and responsible investing ETFs, which includes nine funds and a total of $5.6 billion in funds under management as of end-September 2024.
According to the fund manager, AEBD represents a “breakthrough” in Australian ethical bond investing amid growing appetite for the asset class among investors and financial advisors.
Australian fixed income ETFs have seen net flows of more than $10.3 billion since October, as global interest rate rises over the past two years have put the spotlight on fixed income.
Investor interest is only expected to strengthen as inflation continues to moderate and major central banks begin to cut interest rates, Betashares observed.
“AEBD represents a core portfolio component for ethically conscious Australian investors and their advisors who seek a smart fixed income allocation that reflects responsible investment principles,” said Alex Vynokur, Managing Director of Betashares .
“We are proud to leverage our leadership in the ethical and fixed income ETF market to offer a unique portfolio solution that meets the evolving preferences of advisors and investors.
AEBD aims to track an index that combines robust ESG screens with a smart investment strategy that weights bonds based on their risk-adjusted income potential, rather than adopting a debt-weighted indexing approach.
This strategy, according to Betashares, seeks to provide higher returns compared to standard fixed income benchmarks, such as the AusBond Composite Index.
Vynokur also reiterated Betashares’ commitment to offering ETFs that meet the dual objectives of generating financial returns and meeting responsible investment considerations.
In 2017, Betashares was the first ETF provider to announce offerings combining a broad range of ethical eligibility criteria for international and Australian equities with its Global Sustainability Leaders ETF (ASX: ETHI) and Australian Sustainability Leaders ETF ( ASX: FAIR), respectively.
“We believe AEBD will become a fundamental part of the portfolios of many ethically conscious Australian investors,” Vynokur said.
