XTBs give all investors access to greater choice, transparency , liquidity and capital stability around their financial future. Benefits of XTBs include:
XTBs give all investors access to the benefits of a wide range of corporate bonds from leading ASX-listed companies on ASX. Previously these bonds were only available to institutional investors.
Unlike shares or hybrids, corporate bonds and XTBs over them can form part of the fixed income component of a diversified investment portfolio.
XTBs are available on ASX, which allows you to track the value of your investments on a daily basis.
Bonds are typically less volatile than shares, hybrids or property prices. Exposure to corporate bonds offers investors a known income stream and a known outcome at maturity.
XTBs give you 100% of the coupons paid and the full face value of the bond ($100) in cash at maturity. This is subject to the creditworthiness of the underlying bond issuer and there being no extraordinary expenses for that Class.
From July 1992 to December 2016, shares have returned 9.53% p.a. & bonds 7.11% p.a.
However, the volatility for shares is 15.0% vs the bond market at just 2.7%
Source: Australian Corporate Bond Company MAR 2017
See XTBs in action
How many investments can tell you the exact income you will receive throughout the life of the investment?
XTBs provide peace of mind and let you plan your cash flow to ensure it meets your needs. Our Cash Flow Tool maps out exactly when and how much income you’ll receive so there’s no surprises along the way. Add up to 10 XTBs to your portfolio and see how much income each one pays.
Currently in Australia there are over $850 billion in household deposits, including Term Deposits. However the rates investors are receiving are the lowest since records began.
Source: APRA July 2017 and RBA July 2017
For investors looking for regular income, XTBs provide a regular and reliable income stream. This allows you to match your income to your cash flow requirements.
The income you receive on XTBs will generally be at a higher rate than the interest paid on term deposits and cash based products.
XTBs provide a listed fixed income alternative in a diversified investment portfolio, delivering capital stability, security and reduced risk.
They are available across the bonds of some of the largest ASX listed companies, allowing you to select the XTBs that best meet your investment needs, based on investment term, type of income, or credit quality.
Corporate bonds and the XTBs over them offer greater security of capital repayment than some other investments, such as shares and hybrids. As creditors to the bond issuer, they rank ahead of those hybrids and equity securities if a company is wound up.
XTBs are traded on ASX just like shares, subject to liquidity. The process of buying and selling is simple and easy. If you already have a broker or financial adviser, there’s no additional accounts to open. If you don’t have a broker, you can find a broker via the ASX site, or to find an adviser, visit the FPA site.
Available to SMSFs
SMSFs may access XTBs as part of an investment portfolio, providing a regular income stream.
$157bn or 25% of current SMSF investments are in cash.
Source: APRA/RBA FEB 2017
Want to know more?
Watch this interview with CEO Richard Murphy and Financial Observer journalist Elizabeth Somerville.
You should also be aware of the risks of investing in XTBs.