Key Highlights

• Management fee of 0.10% per annum; fund size of $3.75 billion, the largest Australian bond ETF by assets

• Tracks the Bloomberg AusBond Composite 0+ Year index across 750 holdings; 98.67% bond allocation

• Annual distribution Yield of 3.17%, paid quarterly; latest distribution of $0.757 per unit for July 2026

• Beta of 1.00 and Standard Deviation of 2.93, closely tracking the broad Australian investment-grade bond market

The iShares Core Composite Bond ETF (ASX:IAF) is the largest Australian bond ETF by fund size and one of the most established fixed income exchange-traded products on the ASX, having been admitted on 14 March 2012. With $3.75 billion in Assets and 37.32 million units outstanding, IAF serves as a benchmark-tracking vehicle for the entire Australian investment-grade bond market, offering a comprehensive and cost-efficient passive exposure to government, semi-government, and corporate Debt denominated in Australian dollars. For investors seeking a single-fund, diversified core allocation to Australian fixed income, IAF represents the most liquid and widely held option within its category.

Benchmark and Index Composition

IAF tracks the Bloomberg AusBond Composite 0+ Year Total Return AUD Index, which covers the entire Australian investment-grade Bond Market with no minimum Maturity filter — accepting bonds from the very short end through to the longest-dated maturities. This broad coverage means the fund reflects the full composition of the domestic bond market, including Treasury bonds, state government bonds, and investment-grade corporate bonds. The index is market-capitalisation weighted, meaning that larger outstanding bond issues receive proportionally greater representation in the fund. IAF replicates the index with a Turnover ratio of 13%, indicating a relatively low level of active trading required to maintain index alignment.

Portfolio Composition and Geographic Exposure

IAF holds 750 individual bond positions, with the top 10 representing 22.27% of the fund. The largest positions are predominantly in Australian Commonwealth Government Bonds at various maturities and coupon rates: the 2.75% bond at 2.48%, another 2.75% Tranche at 2.40%, a 3.25% bond at 2.40%, a 2.5% bond at 2.26%, a 1.5% bond at 2.18%, Commonwealth Government Loans at 2.15%, a 4.75% bond at 2.12%, a 1% bond at 2.12%, a 1.25% bond at 2.07%, and a 2.25% bond at 2.03%. Geographic exposure is primarily domestic, with Australia at 86.69%, followed by Supranational issuers at 4.33%, Germany at 2.17%, Canada at 1.72%, the United States at 1.20%, New Zealand at 0.74%, France at 0.63%, the Netherlands at 0.56%, South Korea at 0.35%, and the United Kingdom at 0.31%. The non-Australian exposures reflect international issuers who have issued AUD-denominated bonds in the domestic market.

Distribution Profile

IAF distributes quarterly income. The most recent distribution was $0.757 per unit for July 2026. Prior distributions were $0.806 for April 2026, $0.769 for January 2026, $0.858 for October 2025, and $0.718 for July 2025. The declining distribution from October 2025 ($0.858) to July 2026 ($0.757) reflects movement in market yields and the portfolio's income accrual during each quarter. The annualised yield of 3.17% based on the current unit price of $100.30 is reflective of the prevailing coupon profile across the broad Australian bond market. As a composite fund spanning government and corporate bonds, the yield sits between the lower yields of pure government bond products and the higher yields of credit-focused ETFs.

Risk Metrics and Market Alignment

IAF's beta of 1.00 and standard deviation of 2.93 confirm that the fund moves in line with the broad Australian investment-grade bond benchmark without meaningful tracking error. This is expected for a passively managed, large-cap fund with a turnover ratio of 13%. The 52-week trading range of $99.54 to $104.99 illustrates the Interest Rate sensitivity of the broad bond market over the year, with a range of approximately 5.5% reflecting both the positive income accrual and the negative capital impact of rising rates during the period. Total returns have been modest in the shorter timeframes: -0.21% over one month, 0.31% over three months, 0.39% over six months, and 0.38% over one year. The three-year total return of 3.23% captures the net effect of income generation over a period of significant interest rate volatility.

Scale, Liquidity, and Cost

With $3.75 billion in assets and Average Daily Volume of 47,573 units, IAF is a highly liquid fund with narrow bid-offer spreads and deep Secondary Market trading. The management fee of 0.10% per annum is among the lowest available for a broad Australian bond ETF, making the total cost of ownership highly competitive. The combination of fund scale, Liquidity depth, and cost efficiency positions IAF as the natural default choice for Australian investors seeking a passive core allocation to domestic fixed income, whether within retail superannuation, self-managed super funds, or direct Investment accounts.

IAF is the foundational building block of Australian fixed income ETF investing — a fund that covers the entire investment-grade domestic bond market at minimal cost, with superior liquidity and a 14-year track record on the ASX. The quarterly distributions have varied modestly in recent quarters, with the July 2026 payment of $0.757 representing a decline from the October 2025 peak of $0.858, reflecting shifts in the fund's income accrual across different rate environments. The modest positive total returns over one, three, and six months contrast with the richer three-year return of 3.23%, confirming that the fund's performance is driven primarily by coupon income over time, with capital values subject to interest rate movements. For investors who require a single, comprehensive, and cost-efficient exposure to Australian investment-grade fixed income, IAF remains the benchmark product in its category.