The Betashares Interest Rate Hedged Australian Investment Grade Corporate Bond ETF (ASX:HCRD) is now available on the ASX.
HCRD provides exposure to a portfolio of senior, fixed-rate, investment-grade Australian corporate bonds that are hedged to reduce interest rate risk, and aims to generate monthly income that is higher than that available from term deposits and senior floating rate notes.
The Fund obtains its exposure to bonds by investing in the Betashares Australian Investment Grade Corporate Bond ETF (ASX:CRED), which includes up to 50 eligible bonds.
In addition to its bond exposure, HCRD also employs a strategy of selling bond futures to help reduce the potential negative impact of rising interest rates on the performance of the corporate bond portfolio. As movements in government bond yields are typically the largest contributor to the volatility of fixed rate corporate bonds, this hedging strategy aims to reduce volatility and capital variability.