Competition among fixed interest fund managers has heated up with the launch of several new exchange traded funds (ETFs) by global firms.

Janus Henderson Investors is the latest to introduce a new product in response to rising demand from advisers and investors for actively managed fixed interest products. The launch follows a similar announcement by global fixed interest giant PIMCO, which listed four ETFs on Cboe earlier in February that all adopt active investment strategies.

In December, Schroders launched its Schroder Australian High Yielding Credit Fund - Active ETF (Cboe: HIGH).

“We believe 2025 marks the beginning of a new growth story for fixed interest in Australia. Government policy settings aimed at stimulating growth are likely to reignite investor interest in the asset class,” says Jay Sivapalan, Portfolio Manager and Head of Australian Fixed Interest at Janus Henderson Investors.

Capital on the move

An AUSIEX analysis of a large cohort of its data suggests advisers are among the biggest users of the approximately 70 fixed income ETFs available in Australia and are allocating more capital to the products over time.

Total advised holdings in domestic fixed income ETFs increased by 55.3% in the year to January 31, with close to 35.04% more advised accounts holding the securities. Unsurprisingly, much of that capital was concentrated in the holdings of older investors.

Indeed, the asset class accounted for around 19% of ETF buy trades for Baby Boomers to outstrip every other ETF strategy in 2024. It also accounted for 11.4% of buy trades for advised Generation X investors over the year, ranking as the third most popular ETF strategy in that cohort.

By contrast, fixed interest did not feature among the top ETF strategies used by direct retail investors in any age group over that period, according to the AUSIEX data.

Top fixed income (domestic) ETF holdings – Advised accounts

Source: AUSIEX, figures at February 2025

Finer details

Each of the new ETFs adopts different strategies which can be used for different purposes within portfolios.

The Janus Henderson Australian Fixed Interest Active ETF (Cboe: JFIX) provides investors with exposure to government and semi-government bonds as well as corporate and asset-backed securities. The strategy was first launched as a managed fund in 1994 and has more than $5.2 billion in funds under management.

The new offering is the third fixed interest ETF in Janus Henderson’s local product suite, joining the Janus Henderson Tactical Income Active ETF (Cboe: TACT) and the Janus Henderson Sustainable Credit Active ETF (ASX: GOOD). 

PIMCO’s four products include the PIMCO Global Bond Active ETF (Cboe: PGBF). It seeks maximum return while preserving capital by investing in high quality assets including government, corporate and mortgage securities. Its overarching objective is to provide a core bond holding with low volatility and stable returns.

The PIMCO Australian Bond Active ETF (Cboe: PAUS) employs a similar strategy but primarily invests in Australian or New Zealand currencies. The remaining two new ETFs from PIMCO are the PIMCO Diversified Fixed Interest Active ETF (Cboe: PDFI) and the PIMCO Global Credit Active ETF (Cboe: PCRD). The former offers a diversified portfolio of Australian and global bonds, again aiming to provide a core fixed income allocation.

The PIMCO Global Credit Active ETF aims for higher total return potential than core government bonds and cash and, according to the fund manager, offers capital preservation and diversification as a “high quality complement to traditional bond holdings”.

Renewed appetite

“As advisers reassess client portfolios, we’re seeing a clear shift in fixed income allocations. After a period of underweight exposure, many are now restoring bond allocations to benchmark levels — or even increasing them — to capture renewed opportunities in the asset class,” says Matt Gaden, Head of Australia at Janus Henderson Investors.

The Schroder Australian High Yielding Credit Fund - Active ETF is an actively managed fund that is pitched at retail investors who are looking to diversify their equity or term deposit allocations with exposure to the wholesale high yielding credit universe. It aims to deliver competitive income from Australian corporates and AUD-denominated issues from global corporates, with a targeted return of 2.5% to 3% per annum above the cash rate (before fees) over the medium term.

Inflows into domestic fixed income products were $452 .5 million in January, and $267 million for international fixed income ETFs, according to Cboe.

Advisers now have even more ETFs to choose from when building fixed interest allocations for clients – ranging from the very biggest passive funds to specialist strategies which aim to meet specific needs of investors.

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