Aussie ETF cuts fees on fixed income products, as bonds bounce back

Global X ETFs Australia has announced a fee reduction on two of its fixed income Exchange Traded Funds (ETFs), tapping, it says, renewed investor confidence in the bond market.

The Aussie arm of the US-based Global X has reduced its annual management fees for its Global X USD High Yield Bond ETF (Currency Hedged) (ASX: USHY) by 10 basis points – from 0.40% down to 0.30% a year.

As well, Global X’s US Treasury Bond ETF (Currency Hedged) (ASX: USTB) will see a more modest single basis point fee reduction – from 0.20% to 0.19%.

Global X chief executive Evan Metcalf noted that the fee reduction on its fixed income products comes amid a resurgence in demand for bonds.

“We are pleased to offer competitive rates to Australian investors seeking to leverage favourable fixed-income opportunities presented by global economic conditions,” Metcalf said in a statement.

“We observe increased investor interest in the role of bonds within a portfolio, driven by historically robust yields, and a positive market outlook further fuelled by the anticipation of the US Federal Reserve initiating rate reductions in 2024.

Metcalf also noted that US Treasury bonds, the world’s most heavily traded, “offer stabilising properties in market environments anticipating peak growth and heightened challenges for equities”.

Boasting a “simple way” for local investors to invest in high-yield bonds, the USHY ETF tracks the Solactive USD High Yield Corporates Total Market Index (AUD hedged).

Global X said the index is market capitalisation-weighted and mirrors the performance of high-yield-rated corporate bonds issued in US dollars.

The USTB ETF, geared towards income and portfolio diversification, is a passively managed fund, tracking the iBoxx $ Treasuries Index (AUD hedged). The index is market capitalisation-weighted and mirrors the performance of debt issued by the US Government.

Global X was formerly known as ETF Securities Australia before its acquisition by Korean investment giant Mirae Asset in late 2022. The brand was renamed to Global X ETFs Australia, matching Mirae’s US ETF provider.

Global X boasts “cost-effective and innovation-led products”, providing, it says, “access to a successful pool of thematic, commodity and digital asset ETFs”.