Key Highlights

  • The fund holds 18 long-dated government securities, with Australia at 100%.
  • The top ten holdings make up 95.41% of the fund, mostly Commonwealth bonds.
  • The management fee is 0.15%, and the listed annual Yield is 3.26%.
  • Bonds make up 99.99% of the portfolio, with cash close to zero.

iShares 15+ Year Australian Government Bond ETF (ASX:ALTB) tracks the Bloomberg AusBond Government 15+ Year Index, which covers Australian government bonds with maturities of more than 15 years. The units were listed at $94.29, and the management fee is 0.15%. Long-dated bonds are more sensitive to changes in interest rates than shorter maturities, and that sensitivity defines how the fund behaves.

Ticker

ASX:ALTB

Listed price

$94.29

Management fee

0.15%

Listed annual yield

3.26%

Benchmark

Bloomberg AusBond Govt 15+Y TR AUD

Holdings

18 companies

Portfolio make-up

Bonds make up 99.99% of the fund, and Australia accounts for the whole portfolio. The top ten holdings make up 95.41%, leaving only 4.59% across the remaining positions. The largest holdings include an Australian Commonwealth government Loan at 27.63%, Commonwealth bonds at 24.60% and 23.84%, and Treasury Corporation of Victoria bonds at 4.27%.

The concentration in a few long-dated Commonwealth bonds is typical for an index that covers only the longest maturities.

Income and costs

The listed annual yield is 3.26%, and the management fee is 0.15%. The yield is lower than the yield on shorter-dated corporate or bank bond funds, reflecting the government issuer and the long Maturity profile.

Risks to weigh

The main risk is Interest Rate sensitivity. Bonds with more than 15 years to maturity lose more value when yields rise than shorter-dated bonds, so the unit price can move substantially with rate changes. Inflation can erode the real value of fixed payments over such a long horizon. The high concentration in a small number of issues adds further exposure to changes in those securities.

Final Word

The iShares 15+ Year Australian Government Bond ETF offers focused exposure to long-dated Commonwealth and state bonds at a low fee. Its unit price will respond sharply to interest rate changes, which makes rate direction the main Factor for investors to weigh.