- ASX-listed Exchange-traded Bonds (XTBs) offer direct senior ranking exposure to bonds issued by Australia’s largest ASX-listed companies e.g. Qantas, Telstra and Origin Energy
- Each XTB provides retail investors exposure to a single corporate bond
- XTBs trade on the ASX like other fixed interest securities
Senior bonds offer regular income and capital stability
Exchange traded bonds (XTBs) have been listed on the ASX since 2015 and were developed by the Australian Corporate Bond Company (ACBC) to give retail investors the opportunity to gain exposure to specific corporate bonds issued by some of Australia’s largest ASX-listed companies. Each bond is traded in the unlisted (over-the-counter) wholesale bond market by institutional investors. XTBs can be traded in parcels as small as $100.
What are XTBs?
Before XTBs, retail investors had only been able to access corporate bonds via pooled investments such as bond ETFs and managed funds. XTBs combine the predictable income and capital stability of corporate bonds, with the transparency and liquidity of the ASX market. Further, investing through a managed fund meant you could not choose your exposure to specific companies and maturity dates; via XTBs you can.
At the time of the XTB product launch, we interviewed the CEO of ACBC where he explains how XTBs work and the importance of incorporating corporate bond exposure in an investment portfolio. You can view the video here.
Source: XTB company website
Some of the key features of XTBs include:
- They provide retail investors with senior bond exposure to some of Australia's largest companies with bonds issued in the unlisted wholesale market.
- Each XTB provides exposure to a single bond, not a basket.
- This is a simple way for retail investors and SMSF’s to gain portfolio diversification.
- Both fixed and floating rate bonds are available.
- Investors who are concerned that interest rates could rise should focus on either floating rate XTB’s or short dated XTB’s.
For more information visit the XTB website.
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