German index provider Solactive AG has licensed its newly-created Australian bond index to BetaShares as the benchmark for the latter’s first government bond exchange-traded fund (ETF).
The Solactive Australian Government 7-12 Year AUD TR Index is designed to mirror the performance of Australian dollar-denominated bonds issued by the country’s federal and state governments and sovereign agencies.
It’s the underlying index for the BetaShares Australian Government Bond ETF, Solactive says in a statement on July 11.
BetaShares is a Sydney-based ETF manager. The company launched the new ETF on the Australian Securities Exchange on July 9.
According to BetaShares Chief Executive Officer Alex Vynokur, government bonds are “a core part of a balanced portfolio given their historical negative correlation to equities and high level of stability relative to corporate bonds”.
“The launch of [the new ETF] provides investors with another innovative tool to add to their portfolios and access the income and low-risk characteristics of the Australian government bond market,” Mr. Vynokur says in the statement.
This isn’t the first such partnership between the companies. The BetaShares Australia 200 ETF that tracks 200 Australian large-cap companies launched in May 2018 also uses a Solactive benchmark. According to Solactive, the fund is the fastest Australian ETF to exceed A$500 million (US$350 million) in total assets.
BetaShares managed around A$7.5 billion of total assets as of March 2019, including over A$1 billion in bond ETFs.
As of January 2019, Solactive was serving 400 clients globally with $200 billion invested in products linked to its indexes.