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ETF provider sinks fees in timely fixed-income play
Newly branded ETF provider Global X ETFs Australia has reduced management fees across its fixed income suite of funds in an effort to harness what it sees as emerging opportunities in the sector.
Buoyed by the Reserve Bank of Australia last week slowing the pace of its rate increases and giving signals that an end to the increases may come in 2023, the ETF provider announced significant reductions in pricing on both its US fixed income ETF offerings to help investors take advantage of bifurcated markets.
The management fee for its Global X US Treasury Bond ETF (Currency Hedged) has been lowered from 0.3 per cent to 0.2 per cent and the Global X USD High Yield Bond ETF (Currency Hedged) has been lowered from 0.55 per cent to 0.4 per cent.
“We understand fixed income markets globally are difficult given the toll inflation and coordinated central banks rate action is taking on markets and the broader economy,” says Global X ETFs Australia chief executive Evan Metcalf. “But we see opportunities.”
Metcalf (pictured) says the price reduction makes it easier for Australians to directly access US Treasury bonds – a $USD23 trillion corner of the market.
“Despite the scale of this market, Australian retail investors had no access to a pure play investment in US Treasuries until the Global X ETF was launched in July,” he says.
The high yield bond ETF, Metcalf explains, should also provide a direct line to the attractive sub-investment grade segment of the global bond market.
“As the Reserve Bank of Australia slows its rate increases, there have been calls that inflation may be nearing or at its peak, creating opportunities to start allocating back to fixed income.”
“At the same time, the US Fed is maintaining its hawkish stance on rate increases and is steadfast on curbing inflation,” he continues. “We see this presenting potential market dislocations which our investors can leverage.”
The price amendments come on the back of global financial services firm Mirae Asset’s purchase of local ETF pioneer ETF Securities Australia in June. Subsequent to the deal ETF Securities Australia was rebranded under the existing Mirae Asset subsidiary Global X ETFs, based in New York, and badged as Global X ETFs Australia.
“We are incredibly excited to enter the Australian market and to meaningfully expand our global ETF footprint through the acquisition of ETF Securities’ inventive business,” Mirae Asset Global Investments CEO Byungsung Lee commented at the time.
The ETF Securities Australia purchase added AUD$4.7 billion to Mirae’s global ETF assets under management and shored up its presence in the pacific region.
“This acquisition underscores Mirae Asset’s continued commitment to maintaining industry-leading ETF businesses in key markets around the world and brings immediate scale to our operations in Australia,” Lee said.
