ETF Spotlight on the PIMCO Australia Bond Index ETF (NYSEArca: AUD), part of an ongoing series.
Assets: $25.9 million
Objective: The PIMCO Australia Bond Index ETF tries to reflect the performance of the BofA Merrill Lynch Diversified Australia Bond Index, which provides exposure to Australian dollar-denominated, investment-grade bonds.
Holdings: Top holdings include New S. Wales Treasury Corp 9.5% 2/1/2018, Treasury Corp Victoria Gov 5.3% 11/15/2018, Australian Government 4.1% 4/21/2023, National Australia Bank SR Unsec 3.9% 3/7/2018 and South Aust Govt Fin Auth Loc Gov 3.8% 9/20/2017.
What You Should Know:
- Pacific Investment Management Company sponsors the ETF.
- AUD has a 0.45% expense ratio.
- The ETF has 43 components and the top ten make up 43.4% of the overall portfolio.
- Sector allocations include government-related 63%, investment-grade credit 28% and net cash equivalents 9%.
- Country allocations include Australia 71.4%, Supranational 9.4%, Germany 3.8%, Norway 3.1%, U.K. 2.5%, Canada 1.9%, Netherlands 1.8% and Sweden 1.8%.
- Credit quality breakdown include government 26.1%, AAA 26.5%, AA 30.5%, A 7.2% and not rated 5.3%.
- The fund has an effective duration of 3.99 years.
- The ETF offers a 3.26% 30-day SEC yield.
- AUD is up 2.3% over the past month, up 4.7% over the last three months and up 3.7% year-to-date.
- The fund shows an average daily volume of 2,931 shares, so investors should use limit orders to take better control of trades.
- The ETF is also trading at a -0.95% discount to its net asset value, which means that AUD’s trading price is below the value of its combined underlying securities.
- The WisdomTree Australia & New Zealand Debt Fund (NYSEArca: AUNZ) is the only other ETF to provide significant exposure to Australian debt.
Next page: The latest news
The Latest News:
- According to central bank minutes, the Reserve Bank of Australia is set to hold benchmark rates at the record low of 2.5% “for some time,” reports Elizabeth Redman for The Australian.
- “Members noted that the recent momentum in households’ risk appetite and borrowing behaviour warranted close observation, but agreed that present conditions in the household sector did not pose a near-term risk to the financial system,” the minutes said.
- Australian bond prices dipped after the U.S. Federal Reserve announced the possibility of raising rates in the first half of 2015, the AFP reports.
- “They sold off pretty strongly in reaction to the Federal Open Market Committee and they have been slowly retracing that move for the rest of the day,” Commonwealth Bank of Australia interest rate strategist Philip Brown said in the AFP article.”We have moved three to four points which is a fairly solid move.”
PIMCO Australia Bond Index ETF
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.