Key Highlights

  • The fund is about $846.46 million in size and holds 13 companies and issuers.
  • Every holding is an Australian issuer, with the major banks dominating the portfolio.
  • The management fee is 0.29%, and the listed annual Yield is 5.00%.
  • The top ten holdings make up 83.38% of the fund, which is a highly concentrated portfolio.

Betashares Aus Major Bank Subordinated Debt ETF (ASX:BSUB) tracks the Solactive Australian Major Bank Subordinated Floating Rate Note Index, giving investors exposure to subordinated debt issued by the big four Australian banks. The units were listed at $25.52, the fund is about $846.46 million in size, and the management fee is 0.29%. Subordinated notes rank below senior bonds in a bank failure, which is the reason their coupons are higher.

Ticker

ASX:BSUB

Listed price

$25.52

Fund size

$846.46 million

Management fee

0.29%

Listed annual yield

5.00%

Benchmark

Solactive Aus Major Bank Sub FRN TR AUD

Holdings

13 companies

Portfolio make-up

Bonds make up the entire portfolio, all issued by Australian entities. The largest positions are ANZ Group Holdings at 10.03% and 6.68%, Australia and New Zealand Banking Group at 9.44%, Westpac at 9.29% and 7.62%, Commonwealth Bank at 8.36%, 8.26%, and 7.08%, and National Australia Bank at 8.36% and 8.21%.

The top ten holdings make up 83.38% of the fund, with the remaining 16.62% spread across the balance of the 13 issuers. That concentration means the fund's fortunes are tied to a handful of bank balance sheets.

Income and costs

The listed annual yield is 5.00%, and the management fee is 0.29%. The coupons are floating, so the income rises and falls with short-term interest rates. Turnover is reported at 21.70%.

Risks to weigh

Subordinated debt is first in line for loss after senior creditors in a bank failure, so it carries more risk than senior bank bonds. Coupons can also be deferred or cancelled under certain conditions, and the fund's concentration means problems at one bank would have a large effect. Investors should view the higher yield as compensation for these features.

Final Word

The Betashares Aus Major Bank Subordinated Debt ETF offers a higher income stream than senior bank bonds, drawn from a small group of large Australian banks. The extra yield comes with greater loss exposure and a concentrated portfolio, which investors should weigh carefully.