Key Highlights

• Annual distribution Yield of 5.04%, with monthly distributions of $0.120 per unit in recent months

• Management fee of 0.29% per annum, tracking the Solactive Australian IG Corporate Bond Select Index

• Fund size of $367 million with 14.49 million units outstanding; 98.62% allocated to bonds

• Beta of 0.20 and Standard Deviation of 1.39, reflecting markedly lower rate sensitivity than conventional bond funds

The BetaShares Interest Rate Hedged Australian Corporate Bond ETF (ASX:HCRD) is designed for investors seeking exposure to Australian investment-grade corporate bonds while simultaneously hedging against the adverse effect of rising interest rates on bond valuations. Listed on 16 November 2022, the fund has grown to $367 million in assets, reflecting meaningful investor Demand for income-focused products that explicitly address rate sensitivity. HCRD provides an unusual profile within the fixed income ETF space — corporate Credit income without the typical duration risk that accompanies most bond funds.

Benchmark and Rate Hedging Mechanics

HCRD tracks the Solactive Australian Investment Grade Corporate Bond Select DH Index. The "DH" in the index name denotes "Duration Hedged," meaning the index — and by extension the fund — is constructed to substantially neutralise interest rate duration. This is achieved by overlaying short positions in interest rate futures or other Derivatives on top of the underlying corporate bond exposures. The result is a portfolio that retains the credit spread income from Australian investment-grade corporate bonds while offsetting the price sensitivity that would otherwise occur when interest rates move higher. This structure is particularly appealing when the rate outlook is uncertain or tilted upward.

Portfolio Composition and Geographic Exposure

The fund holds 100% of its Assets in the BetaShares Australian Investment Grade Corporate Bond ETF (CRED), which serves as the underlying vehicle for the corporate bond exposure. The asset allocation shows 98.62% in bonds and 1.39% in cash. Geographic exposure is predominantly domestic, with Australia representing 71.58% of the portfolio. Germany accounts for 13.44%, New Zealand for 5.07%, the United Arab Emirates for 3.86%, France for 2.15%, the United States for 2.17%, Spain for 1.67%, Canada for 0.04%, the Netherlands for 0.01%, and Singapore for 0.01%. The meaningful German and New Zealand allocations reflect the presence of international issuers tapping the Australian bond market, a common feature of the domestic corporate bond landscape.

Distribution Profile

HCRD pays monthly distributions, a feature that distinguishes it from many bond ETFs that distribute quarterly. The most recent distributions have been consistent: $0.120 per unit in September 2026, $0.120 in August, $0.113 in July, $0.102 in June, and $0.106 in May. The annualised yield of 5.04% is notably higher than most government bond or investment-grade Global Bond ETFs, reflecting the credit spread premium earned from corporate bond exposures. The consistency of recent monthly payments reflects the income regularity that HCRD's corporate credit focus is designed to deliver.

Risk Metrics

HCRD's risk profile is markedly different from a conventional bond fund. The beta of 0.20 and standard deviation of 1.39 are materially lower than most fixed income ETFs with comparable credit quality, a direct outcome of the interest rate hedging overlay. The 52-week trading range of $25.14 to $25.66 shows a very narrow band, demonstrating that the rate hedging significantly compresses price volatility. This limited price range also means the fund is unlikely to deliver capital gains of note, and its total return is primarily driven by income rather than appreciation. The three-year total return of 7.44% and one-year return of 4.18% provide context for the fund's income-dominant return profile.

Performance and Market Context

Over shorter horizons, HCRD has delivered positive returns: 0.31% over one month, 1.93% over three months, and 1.84% over six months. These figures, while modest, are consistent with the expected return profile of a duration-hedged corporate credit product — incremental income accrual with limited capital movement. The fund size of $367 million indicates it is well-established within its category and suggests sufficient Liquidity for most institutional and retail participants.

HCRD occupies a well-defined niche in the Australian fixed income ETF market. It delivers corporate credit income at a 5.04% annualised yield while substantially removing the interest rate duration risk that typically accompanies such exposures. The fund's low volatility, monthly distributions, and focused domestic credit tilt make it a product oriented toward income-seeking investors who wish to maintain corporate credit exposure without accepting the full interest rate sensitivity of conventional corporate bond funds. The layered cost structure of the fund-of-fund approach and the mechanics of the rate hedging overlay are factors that merit careful review when assessing the net return and Risk-adjusted outcome relative to alternatives.