Russell Australian Select Corporate Bond ETF

Risk Classification: 2 – Conservative

Price per Unit (29 Mar 16): 20.33 [AUD]

Dividend Yield: 3.53%

Expense Ratio: 0.28%

Please refer prospectus for detailed risk disclosure

Investment Rationale:

This ETF broadly tracks the Australian medium-term investment grade credit market. Investment grade credit spreads have widened over the past 1 year due to deteriorating credit quality in certain sectors that are tied to commodities. However, we feel the market is having good value as we don’t expect the market to capitulate barring a systemic risk event. At the same time, we don’t expect a sharp sell-off in Australian govies due to our overall bearish outlook for riskier assets and balanced outlook by RBA on interest rates.

Below Chart Shows the Australian Investment Grade CDS [spread] Index:

aus cds index

Fundamental Risk to investment:

This ETF will sharply sell off in the event of a sharp widening in credit spreads and/or a sharp sell-off in Australian Government bonds. Neither are base case expectations.

Details of ETF:

Details on the Russell website – For Live data and Prospectus