OZBD - BetaShares Australian Composite Bond ETF

[Dona Ferentes]

OZBD, a BetaShares Australian Composite Bond ETF , provides an opportunity to earn regular, attractive income from a portfolio of Australian corporate and government bonds intelligently selected on the basis of their risk-adjusted income potential.

OZBD aims to track the Bloomberg Australian Enhanced Yield Composite Bond Index, before fees and expenses. This index takes an intelligent investment approach by weighting bonds on the basis of their risk-adjusted income potential rather than debt-weighting, and aims to provide investors with higher returns than the most commonly used Australian fixed income benchmark, the AusBond Composite Index (AusBond). OZBD aims to maintain an overall duration and credit profile that is similar to that of the AusBond index.

Mgmt Costs** (% p.a.)

0.19%

Top 10 holdings

AUSTRALIA GOVERNMENT BOND 3.25% APR-29	4.4
AUSTRALIA GOVERNMENT BOND 2.5% MAY-30	4.0
AUSTRALIA GOVERNMENT BOND 1.0% NOV-31	3.4
AUSNET SERVICES HOLDINGS PTY LTD 4.2% AUG-28	3.2
AUSTRALIA GOVERNMENT BOND 4.75% APR-27	3.0
ASIAN DEVELOPMENT BANK 3.3% AUG-28	2.9
INTER-AMERICAN DEVELOPMENT BANK 3.1% FEB-28	2.9
LLOYDS BANKING GROUP PLC 4.25% NOV-27	2.9
VERIZON COMMUNICATIONS INC 4.5% AUG-27	2.7
VODAFONE GROUP PLC 4.2% DEC-27	2.7

 

[divs4ever]

AUSTRALIA GOVERNMENT BOND 1.0% NOV-31

one would hope they were bought at a huge discount ( to face value )

i don't think 1% yield ( less 0.19% fees ) will very helpful in nine years time ( not to mention the inflation ravaged face value )

just saying , a while back i was buying MBLHB paying BBSW + 1.5% but was paying 62 cents in the dollar for them so what are those bonds really worth ??

 

[qldfrog]

With inflation,bonds like that are dead money IMHO.i only kept a few inflation indexed ones in my portfolio and even these are not going to be winners.cpi being so distorted

 

[divs4ever]

after CAM has seemingly moved away from bond exposure my sole exposure is via LIC IBC , so less than 1%

i currently do not see the reward for the risk taken , currently in bonds

ALTHOUGH if Twiggy still has those infrastructure bonds @ 8% ( denominated in $US ) they might still be a fair deal

 

[So_Cynical]

https://www.betashares.com.au/files/factsheets/OZBD-Factsheet.pdf

Monthly distributions and a running yield of 2.7% ~ better than a bank deposit, been some large capital flows into bond funds over the last few years, Challengers (managed ETF) bond fund XARO has a market cap of just under 900M.

 

[divs4ever]

better them than me ( tipping money into bonds after 2017 )

PS the only reason i have cash in the bank is so i can place it better when an opportunity arrives ( like FMG ex-div. in 2021 )

( and the better shares pay franking credits to boot , with some chance of capital growth )

 

[So_Cynical]

better them than me ( tipping money into bonds after 2017 )

PS the only reason i have cash in the bank is so i can place it better when an opportunity arrives ( like FMG ex-div. in 2021 )

( and the better shares pay franking credits to boot , with some chance of capital growth )

~
Some people are very risk adverse, others are at a certain point in life where X amount of their funds should be allocated to low risk and low volatility investments, like i said - there has been significant inflows into bond funds over the last few years.

The number of units in the XARO ETF have increased by 400% over the last 2 years, there is a lot of low risk money moving around the market, as interest rates go up we can expect a lot of liquidity to exit the higher risk options.

 

[InsvestoBoy]

one would hope they were bought at a huge discount ( to face value )

i don't think 1% yield ( less 0.19% fees ) will very helpful in nine years time ( not to mention the inflation ravaged face value )

That's not how it works. The 1% you see quoted is the bond coupon.

The bonds price to whatever a 9 year Aus Gov bond is worth in the market today. You (hopefully obviously) don't pay face value on a bond in the secondary market (except perhaps coincidentally).

The current 10y yield for an Aus Gov is 2.24% so this bond should trade around $90 and you can see on https://www2.asx.com.au/markets/trade-our-cash-market/equity-market-prices/bonds that it does

just saying , a while back i was buying MBLHB paying BBSW + 1.5% but was paying 62 cents in the dollar for them

MBLHB was a preferred share, not a bond. The BBSW+1.5 you got was to compensate you for credit risk, capital structure risk, inflation risk etc. Government bond pricing is considered "risk free" in nominal terms.

so what are those bonds really worth ??

Unlike equities, bond pricing is a purely mathematical effort, there is no speculation required.

With inflation,bonds like that are dead money IMHO.i only kept a few inflation indexed ones in my portfolio and even these are not going to be winners.cpi being so distorted

Most people are completely uneducated about bonds, the difference between Gov and Corp bonds, what drives their pricing, concepts like duration, YTM, etc.

I hold 25% of my portfolio in long duration (20+y) AU and US government bonds and sleep like a baby. I was happily dumping them into the market during Q12020 when the market was desperate for liquidity and declining growth/inflation expectations to buy equities, and I have been buying them back ever since as they have fallen while selling equities. I think there's a decent chance Gov duration does very well this year as growth and inflation struggle to beat their comps.

https://www.pragcap.com/is-the-bond-bear-market-over/ is a good place to start educating yourself a little.

 

[divs4ever]

on the contrary MBLHB was a hybrid floating rate note

MQCPA was the preference share ( both have now been redeemed ) in fact MQCPA even gave you franking credits ( thanks in abundance Macquarie for that , several others didn't )

MQCPA normally traded at a minimal discount to face value because it was paying 11% pa ( plus franking )

whilst MBLHB took a significant hit on the face value on the open market

i understand government bonds are guaranteed by the government ( the tax-payer, so effectively you are guaranteeing your own loan .. so cute when you buy local treasuries ) while depending on the debt instrument corporate debt will leverage the company's reputation and/or some of it's assets depending on the level of securitization .

now just like many other official narratives i am sure you can wheel out reams of documentation , which will confuse you to think otherwise ( governments are still allegedly servants of the people , although there is a school of thought they have all been discreetly incorporated , and let you believe you have some influence )

but when a government is short of cash ( and credibility ) what do they do .. tap the bank of mum and dad ( the taxpayer )

interesting times coming ( i would rather be sleeping on 25% silver or gold , but i need some income to resist the incoming devaluation , named , currently , inflation )

good luck

i think the global economy is in a lot of trouble ( and has been since September 2019 )

 

[InsvestoBoy]

on the contrary MBLHB was a hybrid floating rate note

Nope.

Macquarie Income Securities | Macquarie Group

Macquarie Income Securities (MIS) are stapled securities comprising a preference share and a holder’s interest. MIS are quoted on the Australian Securities Exchange under the code ‘MBLHB’.

www.macquarie.com

but when a government is short of cash ( and credibility ) what do they do .. tap the bank of mum and dad ( the taxpayer )

Not how it works. Governments spend first then tax (and issue bonds) later.

( i would rather be sleeping on 25% silver or gold

Yeah, I've got that too (https://www.investopedia.com/terms/p/permanent-portfolio.asp).

 

[divs4ever]

MBLHB not as it was described in the PDS a preference share implies it pays dividends ( if any ) BEFORE ordinary share-holders

having also held MQCPA at the same time ( for most of the time i held ) there seemed to be a bit of a disconnect to a preference share ( i do not remember a MBL or MGL preference share being listed on the ASX at the time AND from memory it was listed as unsecured , subordinated debt ( non cumulative as well from memory ) which is why it was smashed compared to MQCPA and other more recent Macquarie offerings

did the regulators miss something ??

 

[Belli]

did the regulators miss something ??

No. You did by misinterpreting the product.