ACBC launches XTB model portfolios

14-Jul-2016

By Sarah Kendell

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Australian Corporate Bond Company (ACBC) has launched two new exchange-traded bond (XTB) model portfolios in an effort to provide advisers with more guidance on how to implement corporate bonds in client portfolios.

The first, the High Yield Model Portfolio, will consist of at least eight XTBs selected on a quantitative basis with a qualitative overlay, while the Maturity Ladder Model Portfolio will aim to provide a return of capital from maturing XTBs on an annual basis, consisting of at least five securities.

They are available on request from ACBC, with advisers able to select one or a combination of both portfolios to best suit client needs.

ACBC chief executive Richard Murphy told financialobserver surging interest from advisers and brokers had driven the decision to extend the group’s offering from single bond units to model portfolios.

“As the range of XTBs has continued to expand, now with almost 40 fixed and floating rate XTBs available, advisers have requested assistance in developing portfolios of single bonds,” Murphy said.

“We see this as a natural progression and evolution in servicing our clients and responding to market demands.”

The rules-based nature of the portfolios meant their components would change automatically over time without the need for the additional costs of active management, he said.

“This allows the portfolios to adapt to various market conditions, while meeting the defined investment outcomes of the client,” he said.

While the portfolios were not offered on adviser platforms as yet, they might be in the future, he added.

Around $70 million of XTBs have been traded since the launch of the first units by ACBC in May last year.

The products offer direct exposure to returns from corporate bonds over blue-chip companies such as BHP, National Australia Bank and Telstra.

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