Key Highlights

  • The fund holds 381 companies and issuers, with the top ten making up 10.40% of the portfolio.
  • Bonds make up 92.09% of the fund, and the benchmark excludes the big four Australian banks.
  • The management fee is 0.12%, and the listed annual Yield is 4.65%.
  • Australian issuers account for 42.59%, with Canada at 13.41% and Singapore at 7.82%.

iShares Yield Plus ETF (ASX:IYLD) tracks a custom Bloomberg AusBond Credit and FRN index that excludes the big four Australian banks, providing exposure to Australian and international credit securities and floating rate notes. The units were listed at $99.07, the fund is about $270.53 million in size, and the management fee is 0.12%. The exclusion of the four largest banks shapes the mix of issuers, pushing the portfolio toward offshore and other domestic credit.

Ticker

ASX:IYLD

Listed price

$99.07

Fund size

$270.53 million

Management fee

0.12%

Listed annual yield

4.65%

Benchmark

BBg AusBond Cre & FRN Ex B4 Banks TR AUD

Holdings

381 companies

Portfolio make-up

Bonds make up 92.09% of the fund, with cash at 7.92%. Australia accounts for 42.59%, followed by Canada at 13.41%, Singapore at 7.82%, the Netherlands at 7.18%, the United States at 6.56% and France at 5.48%. The largest holdings include CPPIB bonds at 1.28% and 1.00%, a Toyota Finance Australia note at 1.18%, an ING Bank note at 1.13% and an Alphabet note at 0.93%.

The top ten make up 10.40% of the portfolio, so the fund's exposure is spread across a wide range of issuers.

Income and costs

The listed annual yield is 4.65%, and the management fee is 0.12%. Because part of the portfolio is floating rate, income tends to move with short-term rates, while fixed-rate holdings respond to longer-term yields.

The fund's fee is low relative to actively managed credit funds, and its size gives it a reasonable base of units in issue.

Risks to weigh

Credit risk is the main consideration. Corporate and offshore issuers can lose value when credit spreads widen, and the yield tilt means holdings are not all of the highest credit quality. Fixed-rate holdings are sensitive to interest rates. Currency exposure to offshore issuers is a further point, depending on how the portfolio is hedged.

Final Word

The iShares Yield Plus ETF offers a broad credit portfolio that excludes the big four banks, with a yield above government bond funds. Its issuer mix is more international than many Australian bond products, and investors should weigh the credit and currency exposure alongside the income.