Key Highlights

  • The fund holds Australian Government Bonds only, with 100% of the portfolio in Australia.
  • The management fee is 0.18%, and the listed annual Yield is 2.61%.
  • The fund holds 31 companies and issuers, with the top ten representing 50.97% of the portfolio.
  • The largest positions are Australian Commonwealth bonds, each at around 5%.

iShares Treasury ETF (ASX:IGB) tracks the Bloomberg AusBond Treasury 0+ Year Index, which covers Australian Commonwealth government bonds. The units were listed at $97.26, and the management fee is 0.18%. Because the fund holds only government issuers, its unit price is driven mainly by interest rates rather than by company-specific or Credit factors.

Ticker

ASX:IGB

Listed price

$97.26

Management fee

0.18%

Listed annual yield

2.61%

Benchmark

Bloomberg AusBond Treasury 0+ Yr

Holdings

31 companies

Portfolio concentration

Australia makes up 100% of the portfolio, and bonds account for 99.97%, with a trace of cash. The fund holds 31 issuers and securities, and the top ten make up 50.97% of the total, a noticeably higher concentration than the broad composite funds.

The largest positions are Australian Commonwealth bonds at 2.75%, 3.25%, 2.5%, 1.5% and 4.75% maturities, each sitting between roughly 5% and 5.5% of the fund.

Income and costs

The listed annual yield is 2.61%, which is lower than the yield on corporate or blended bond funds. That gap reflects the lower credit risk of government securities. The management fee is 0.18%, and turnover is reported at 19%.

Investors choosing this fund are generally trading some income for a lower level of credit risk.

Risks to weigh

Government bonds are not free of risk. Their prices fall when interest rates rise, and the effect is larger for securities with longer maturities. Inflation can also erode the real value of fixed payments. The fund's pure government focus removes credit risk but keeps full sensitivity to the rate cycle.

Because the portfolio is concentrated in a small number of Commonwealth issues, changes in the outlook for a few bonds can have a noticeable effect on the fund as a whole.

Final Word

The iShares Treasury ETF offers a focused exposure to Australian government bonds at a modest cost. Its lower yield reflects the reduced credit risk, while its unit price will continue to respond closely to changes in interest rates.