Aussie ETF provider BetaShares has launched the first ETF in Australia to offer exposure to Australian Bank floating rate bonds. The BetaShares Australian Bank Floating Rate Bond ETF (ASX: QPON) gives investors monthly income with the relative capital stability of floating rate notes.

The ETF invests 80% of its assets in floating rate notes issued by the big four Australian banks.

QPON invests in a portfolio of some of the largest and most liquid floating rate bonds issued by Australian banks. The fund holds 20% of its assets in floating rate bonds issued by each the big four Australian banks (ANZ Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac), with the remaining 20% invested in bonds issued by the large ‘regional’ banks, including Macquarie Bank and AMP Bank.

Floating rate notes have historically exhibited low correlation with equities in addition to defensive characteristics during market declines.

The ETF tracks the Solactive Australian Bank Senior Floating Rate Bond Index. Eligible bonds must have at least AUD 500 million outstanding and a term to maturity of between one to five years.

As of 6 June, the ETF had a running yield of 2.89%, an average maturity of 4.2 years, a modified duration of 0.17 years and an average credit rating of A+.

The management expense ratio of the fund is 0.22%.