Key Highlights

  • The fund holds around 99% bonds, spread across 750 companies and issuers.
  • Australian securities account for 86.99% of the portfolio.
  • The management fee is 0.10%, and the listed annual Yield is 3.18%.
  • The top ten holdings represent 22.67% of the fund, with Government Bonds forming most of the largest positions.

iShares Core Composite Bond ETF (ASX:IAF) tracks the Bloomberg AusBond Composite 0+ Year Index, giving investors a single exposure to Australian government and corporate fixed-income securities. The units were listed at $101.43 with a fund size of about $3.76 billion, and the management fee is 0.10%. The fund offers a broad, diversified route into Australian Debt rather than a view on any one issuer or sector.

Ticker

ASX:IAF

Listed price

$101.43

Fund size

$3.76 billion

Management fee

0.10%

Listed annual yield

3.18%

Benchmark

Bloomberg AusBond Composite 0+ Yr

Holdings

750 companies

Portfolio make-up

Bonds account for 99.01% of the fund, with cash making up 0.99%. Australian securities dominate at 86.99%, followed by supranational issuers at 4.18%, Germany at 2.08%, Canada at 1.81% and the United States at 1.15%. The largest individual positions are Australian Commonwealth government bonds, each at roughly 2% to 2.5% of the fund.

The top ten holdings make up 22.67% of the portfolio, which leaves most of the fund spread across the remaining 740 or so issuers. That breadth is typical of an index that includes both government and corporate debt.

Income and costs

The listed annual yield is 3.18%, and the management fee is 0.10%. Turnover is reported at 13%, which suggests the fund is not frequently reshuffling its holdings to keep pace with the index.

Because the yield reflects the blended income of government and corporate bonds, it sits between the yields of the more defensive government-only products and the higher-yielding credit-focused funds.

Risks to weigh

Bond prices move in the opposite direction to interest rates. When rates rise, the unit price of a composite bond fund can fall, and the drop may be sharper for longer-dated holdings. Credit spreads also matter, because the corporate portion of the fund can lose value if issuers face stress.

A broad index fund removes the risk of picking the wrong issuer, but it cannot avoid the market-wide pressures that affect all bonds. Investors should weigh those pressures against the income the fund provides.

Final Word

The iShares Core Composite Bond ETF gives a broad, low-cost spread across Australian government and corporate debt. It suits investors who want diversified fixed-income exposure in a single holding, while accepting that its unit price will move with interest rates and credit conditions.