Every Bond & Fixed Income ETF on the ASX: The Complete Guide
There are 78 bond and fixed income ETFs listed on the ASX, holding a combined $46 billion in assets. That makes this the largest ETF category by fund count — and almost certainly the least comprehensively covered.
Most ETF content in Australia is written about shares. VAS vs A200. VDHG vs DHHF. Which global ETF wins on fees. Bonds get a paragraph in a "diversification" article, and that's usually the end of it.
This guide covers all 78. Every category. Every fund. Every fee. With performance data, pros and cons, and a clear explanation of what each one actually does.
Bond ETFs range from near-zero risk cash funds like AAA and BILL — which function almost like a high-interest savings account inside your brokerage account — all the way to geared long-duration US Treasury products like GGOV, which lost nearly 30% over five years as interest rates rose sharply from 2022.
This is critical reading for retirees managing their own income. For SMSF trustees who need capital preservation alongside growth. And for anyone building a portfolio from scratch who wants to understand where bonds actually fit — and where they don't.
One more thing before we start: if you hold VDGR, VDHG, or any other all-in-one diversified ETF, you already own bonds. VDHG holds roughly 10% in fixed income. VDGR holds closer to 30%. Dedicated bond ETFs give you something those products don't — precise control over duration, credit quality, and yield. That control matters more than most investors realise.
How Bond ETFs Work
Before we look at the funds, you need to understand one thing that trips up almost every first-time bond investor: when interest rates rise, bond prices fall.
This is called duration risk. And it's the single biggest reason so many bond ETFs have delivered terrible five-year returns.
Here's the mechanics. A bond pays a fixed coupon — say 3% per year. If new bonds are now issued at 5%, nobody wants your 3% bond anymore. Its price drops until the effective yield matches the market. That's how bond pricing works.
Duration measures how sensitive a bond is to rate changes. Think of it as a rough multiplier: a fund with 8 years of duration will lose approximately 8% for every 1% rise in interest rates. A fund with 1 year of duration barely moves.
From 2022 to 2024, Australian and global interest rates rose sharply. A 10-year government bond ETF could lose 15% or more in that environment. GGOV, which holds 20+ year US Treasuries, lost -29.65% over five years. Not because the bonds defaulted. Because rates rose and long-duration bonds got crushed.
Shorter duration and floating rate funds barely moved. Cash ETFs like AAA and floating rate funds like QPON and FLOT reset with rates — so when rates went up, their yields went up too, and their prices stayed flat.
Credit risk is the second dimension. Government bonds are the safest — backed by sovereign governments. Investment-grade corporate bonds pay more but carry company default risk. Subordinated debt sits lower in the repayment queue. High yield bonds pay even more but are the most likely to default in a crisis.
Bond ETFs pay distributions — usually monthly or quarterly. For many investors, particularly retirees, this income is the point. Unlike growth ETFs where returns come from price appreciation, bond ETFs return most of their value through regular income payments.
Where the Money Sits
With $46 billion across 78 funds, Australian bond ETFs range from the $5 billion AAA to a handful of funds that have barely raised $2 million. The distribution is extremely skewed — the top five funds control the majority of assets.
AAA at $5.0B is the largest fund in the entire category — and it's technically a cash ETF, not a bond fund. It holds bank deposits and short-dated bank securities. It doesn't have duration risk. That's exactly why investors love it.
VBND at $4.0B is the largest actual bond ETF — a globally diversified aggregate bond fund, currency-hedged to AUD. It's Vanguard's flagship fixed income product and has become the default choice for investors wanting broad global bond exposure.
IAF at $3.7B and VAF at $3.5B are the dominant Australian composite bond funds — both launched in 2012, both charging 0.10% MER. They're nearly interchangeable.
SUBD at $3.5B is perhaps the most interesting story in the fixed income space. VanEck's subordinated debt ETF launched in 2019 and has attracted massive inflows — and for good reason. It delivered 5.45% over one year and 21.51% over five years, all with minimal interest rate sensitivity. More on this in the subordinated debt section.
The top five bond ETFs together hold well over $20 billion. Everything else is fighting for the remaining slice.
Categories: Full Breakdowns
1. Cash ETFs — 5 funds, $7.3B total AUM
Cash ETFs are not technically bond funds — they hold bank deposits and very short-dated instruments rather than bonds. But they're classified alongside fixed income, they're traded on the ASX, and they solve a genuine need: somewhere to park cash that isn't a bank account.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
BetaShares Australian High Interest Cash ETF | $4,953 | 0.18% | 3.85% | 12.47% | 14.69% | |
iShares Core Cash ETF | $1,157 | 0.07% | 3.85% | 12.40% | 14.24% | |
BetaShares Australian Cash Plus Active ETF | $536 | 0.18% | 4.04% | n/a | n/a | |
iShares Enhanced Cash ETF | $527 | 0.12% | 3.95% | 12.82% | 14.69% | |
VanEck Cash Plus Active ETF | $100 | TBC | n/a | n/a | n/a |
All three returned roughly 3.85–3.95% over the past year — essentially the RBA cash rate minus fees. They do not lose value when interest rates rise, because they're not holding bonds with duration.
BILL is the cheapest at 0.07% MER — one of the cheapest ETFs on the entire ASX. For investors who are purely yield-focused and want to minimise fees, BILL is the default.
AAA is the largest and most popular, with $5B in AUM despite being slightly more expensive than BILL. Its first-mover advantage and BetaShares' marketing have helped it dominate.
MMKT is BetaShares' actively managed cash fund — it targets a return above the RBA cash rate by holding a mix of deposits, bank paper, and short-dated securities. It returned 4.04% over the past year, the highest of the cash ETFs, though at the same 0.18% MER as AAA.
ISEC is iShares' "enhanced cash" fund — it takes slightly more risk than BILL by holding a broader mix of short-dated securities, and it earned 3.95% over the past year versus 3.85% for the others. The premium is marginal.
MONY is VanEck's newest entry, launched February 2026. Too new for return data, but VanEck has not yet disclosed the MER — worth watching as it builds a track record.
AAA vs a high-interest savings account: The best savings accounts in Australia currently offer 4.5–5.0% for introductory or conditional rates. AAA yields approximately 3.85%. So why use it? AAA is CHESS-sponsored, it lives alongside your other ETFs in your brokerage account, it has no conditions, and it provides the same diversification benefits. For SMSF cash buffers, income drawdown reserves, or emergency cash within a portfolio, AAA is the go-to. For pure yield-seeking with no other considerations, a savings account often wins.
Cross-link: Best ETFs for SMSF
2. Australian Government Bond ETFs — 10 funds, ~$4.0B total AUM
Australian government bonds are the safest bonds you can buy. They're backed by the Commonwealth or state governments. Default risk is essentially zero.
But safety doesn't mean they can't lose money — and over the past five years, many of them have.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
Vanguard Australian Government Bond Index ETF | $1,324 | 0.16% | 2.93% | 9.55% | 0.44% | |
BetaShares Australian Government Bond ETF | $1,160 | 0.22% | 3.06% | 10.43% | -3.49% | |
iShares Treasury ETF | $331 | 0.18% | 2.32% | 8.16% | -0.27% | |
VanEck 10+ Year Australian Government Bond ETF | $387 | 0.22% | 2.71% | — | — | |
VanEck 5-10 Year Australian Government Bond ETF | $91 | 0.22% | 2.99% | — | — | |
VanEck 1-5 Year Australian Government Bond ETF | $26 | 0.22% | 2.60% | — | — | |
iShares 15+ Year Australian Government Bond ETF | $177 | 0.15% | 0.89% | — | — | |
Russell Investments Australian Government Bond ETF | $281 | 0.24% | 2.10% | 7.83% | -3.72% | |
Russell Investments Aus Semi-Government Bond ETF | $61 | 0.26% | 3.20% | 11.61% | 2.95% | |
State Street SPDR S&P/ASX iBoxx Aus Gov Bond ETF | $73 | 0.10% | 3.06% | 9.88% | -1.17% |
The five-year performance numbers tell the story: VGB returned just 0.44% over five years. AGVT returned -3.49%. RGB returned -3.72%. These aren't edge cases — they're the expected outcome when rates rise sharply and you're holding long-duration government bonds.
Duration is the key variable here. The longer the maturity of the bonds held, the more painful the rate rises were.
ALTB holds bonds with 15+ years to maturity. It returned just 0.89% over one year — the weakest performer in this category. XGOV targets 10+ years and returned 2.71%.
VanEck's newer suite — 1GOV, 5GOV, XGOV — gives investors precise duration targeting that wasn't available before. You can now build an Australian government bond ladder with exact maturity exposure.
How to use this category:
For capital preservation, stick to short-duration (1GOV)
For a bet on rate cuts, go long-duration (XGOV, ALTB) — but only if you believe rates will fall significantly
For low-cost broad exposure, GOVT at 0.10% MER is the cheapest option in the category
RSM holds semi-government bonds (state government and government-related entities) rather than pure Commonwealth bonds — slightly higher yield, slightly more credit risk
3. Australian Composite/Broad Bond ETFs — 5 funds, ~$9.5B total AUM
Composite bond funds hold a mix of government and high-quality corporate bonds — essentially a "total bond market" approach for Australian fixed income. They're the most common recommendation for investors who want simple, diversified bond exposure.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
iShares Core Composite Bond ETF | $3,705 | 0.10% | 2.95% | 10.54% | 1.84% | |
Vanguard Australian Fixed Interest Index ETF | $3,491 | 0.10% | 3.04% | 10.61% | 1.96% | |
BetaShares Australian Composite Bond ETF | $1,107 | 0.19% | 3.52% | 13.15% | — | |
BetaShares Western Asset Aus Bond Active ETF | $855 | 0.42% | 3.24% | 11.92% | 2.33% | |
State Street SPDR S&P/ASX iBoxx Aus Bond ETF | $41 | 0.10% | 3.59% | 11.40% | 1.17% |
IAF and VAF are near-identical products. Both charge 0.10% MER. Both returned approximately 3% over one year and under 2% over five years. Both launched in 2012. Choosing between them is largely a matter of which fund manager you prefer to deal with — BlackRock (iShares) or Vanguard. IAF has the larger AUM but VAF saw stronger recent inflows.
OZBD is BetaShares' alternative, launched in 2022. It charges 0.19% — almost double IAF and VAF — but returned 3.52% over one year, marginally outperforming. The index methodology differs slightly, giving it a bit more tilt toward higher-quality corporates. Three-year returns look strong at 13.15%, but this includes a period from a very low base.
BNDS is actively managed by Western Asset Management (now part of Franklin Templeton), distributed by BetaShares. Charging 0.42%, it returned 3.24% over one year — essentially matching the passive funds at 4x the cost. The active management premium has not been justified in this fund.
BOND from State Street is tiny at $41M and has seen outflows. At 0.10% MER it's as cheap as IAF and VAF, but the liquidity and AUM make it less appealing.
Verdict: IAF or VAF at 0.10% are the default choices here. Pick iShares or Vanguard based on brand preference.
4. Australian Corporate Bond ETFs — 7 funds, ~$3.5B total AUM
Corporate bonds pay more than government bonds — because companies can default in a way governments rarely do. The extra yield compensates for credit risk.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
BetaShares Aus Investment Grade Corporate Bond ETF | $1,778 | 0.25% | 5.01% | 20.69% | 6.71% | |
Vanguard Australian Corp Fixed Interest Index ETF | $769 | 0.20% | 3.73% | 15.85% | 8.74% | |
iShares Core Corporate Bond ETF | $531 | 0.15% | 3.79% | 15.56% | 8.12% | |
VanEck Australian Corporate Bond PLUS ETF | $370 | 0.32% | 4.31% | 17.58% | 7.20% | |
Russell Investments Aus Select Corporate Bond ETF | $334 | 0.28% | 3.21% | 13.44% | 8.44% | |
Global X Australian BANK Credit ETF | $183 | 0.25% | 4.21% | — | — | |
BetaShares Interest Rate Hedged Aus Corp Bond ETF | $243 | 0.29% | 6.10% | 24.52% | — |
CRED at $1.78B is the category leader — and its 5.01% one-year return makes it look very attractive compared to the composite bond funds returning 2.95–3.04%. It holds investment-grade corporate bonds from Australian issuers, predominantly banks and major companies.
ICOR at 0.15% MER is the cheapest corporate bond ETF on the ASX and a strong alternative for cost-conscious investors. Its five-year return of 8.12% slightly trails VACF (8.74%) and CRED (6.71%), but the cost advantage is meaningful over time.
PLUS from VanEck takes a slightly different approach — it screens for higher-quality issuers within the corporate bond universe and charges 0.32%. The one-year return of 4.31% reflects this quality tilt.
HCRD is the most interesting fund in this category. It holds Australian corporate bonds but applies an interest rate hedge — using futures contracts to remove duration risk entirely. The result is a fund that isolates pure credit risk without rate sensitivity. Its 6.10% one-year and 24.52% three-year returns are the best in this category because during the rate-rising period, it wasn't dragged down by duration. For investors who want credit exposure without rate exposure, HCRD is genuinely different.
BANK from Global X focuses specifically on Australian bank senior credit — a niche product for investors who want targeted exposure to bank debt.
5. Floating Rate & Subordinated Debt ETFs — 10 funds, ~$10B total AUM
This is the category where the money has been flowing — and for good reason.
Floating rate bonds reset their coupon periodically based on the current cash rate (usually BBSW — the bank bill swap rate). When rates rise, the coupon rises. The bond price barely moves. It's the antidote to duration risk.
Subordinated debt sits lower in the capital structure than senior bonds — if a bank fails, subordinated debt holders get paid after senior creditors. The compensation for this extra risk is a meaningfully higher yield.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
VanEck Australian Subordinated Debt ETF | $3,489 | 0.29% | 5.45% | 19.15% | 21.51% | |
BetaShares Australian Hybrids Active ETF | $2,585 | 0.55% | 4.64% | 16.19% | 20.80% | |
BetaShares Aus Bank Senior Floating Rate Bond ETF | $1,914 | 0.22% | 4.77% | 16.03% | 17.69% | |
VanEck Australian Floating Rate ETF | $1,020 | 0.22% | 4.53% | 14.78% | 16.57% | |
BetaShares Australian Major Bank Hybrids Index ETF | $666 | 0.35% | 4.19% | 14.25% | — | |
BetaShares Aus Major Bank Subordinated Debt ETF | $622 | 0.29% | 5.48% | — | — | |
Macquarie Subordinated Debt Active ETF | $443 | 0.29% | 6.24% | — | — | |
Elstree Hybrid Fund Active ETF | $48 | 0.62% | 4.65% | 16.14% | — | |
Daintree Hybrid Opportunities Active ETF | $38 | 0.75% | 3.90% | 18.80% | — | |
VanEck Australian Fixed Rate Subordinated Debt ETF | $16 | 0.29% | — | — | — | |
BetaShares Aust Enhanced Credit Income Complex ETF | $60 | 0.29% | — | — | — |
SUBD has been the standout of the entire bond category. $3.5B in AUM, 5.45% over one year, and 21.51% over five years — all without meaningful interest rate sensitivity. It holds Tier 2 subordinated debt issued by Australian banks (ranked below senior bonds in the capital structure). These are floating rate instruments, so rate rises boosted rather than hurt their returns. VanEck was early to this product and has been rewarded with strong flows.
BSUB is BetaShares' 2024 response — a nearly identical product focused on the major four banks. It returned 5.48% over one year, marginally beating SUBD. Too new for five-year comparisons.
MQSD from Macquarie is an actively managed subordinated debt fund launched in early 2025. Its 6.24% one-year return is the best in the entire credit space — though it's a short track record.
QPON and FLOT are pure floating rate funds — they hold senior bank bonds rather than subordinated debt. Slightly safer, slightly lower yield. Both charge 0.22%.
HBRD and BHYB hold bank hybrid securities (Also Called Additional Tier 1 Capital or AT1). Hybrids pay more than subordinated debt but rank even lower — in a bank failure scenario, AT1 hybrid holders may receive nothing. HBRD is actively managed (0.55% MER) while BHYB tracks an index (0.35% MER). Both have delivered strong returns but carry tail risk that most investors underestimate.
FSUB is VanEck's newest product — a fixed rate (rather than floating rate) subordinated debt fund. Too new for return data.
Note: One important consideration for hybrids specifically — APRA has been phasing out AT1 hybrid instruments as a capital requirement for Australian banks. This regulatory shift adds uncertainty to long-term hybrid products.
6. Inflation-Linked Bond ETFs — 2 funds, ~$1.3B total AUM
Inflation-linked bonds adjust their coupon payments based on the CPI. When inflation rises, you earn more. They're a hedge against the erosion of purchasing power.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
iShares Government Inflation ETF | $1,087 | 0.18% | 3.22% | 9.31% | 6.17% | |
BetaShares Inflation Protected US Treasury Bond CH ETF | $199 | 0.22% | 4.64% | — | — |
ILB holds Australian government inflation-linked bonds — one of the oldest bond ETFs on the ASX, listed in 2012. Its five-year return of 6.17% outperformed standard Australian government bond funds (VGB returned 0.44% over the same period). This makes sense: high inflation boosted the real return on CPI-linked instruments while hurting fixed-coupon bonds.
UTIP holds US TIPS (Treasury Inflation-Protected Securities), hedged to AUD. Launched in 2023, it returned 4.64% over one year. It gives Australian investors exposure to US inflation dynamics — useful if you're concerned about imported inflation.
Inflation-linked bonds are particularly relevant for retirees with fixed expenses that rise with the cost of living. They don't provide the highest absolute yield — but they provide yield that keeps pace with inflation, which is what matters for purchasing power preservation.
7. Global Bond ETFs — 19 funds, ~$9B total AUM
Global bond ETFs give investors exposure to international fixed income markets — US Treasuries, global aggregates, international corporate bonds, emerging market debt, and green bonds. The defining characteristic of this category is that almost all are currency-hedged — and they should be.
Unhedged bond ETFs add currency risk to interest rate risk. When the AUD strengthens, foreign bond returns fall in AUD terms. Hedging removes this. For more detail: Hedged vs Unhedged ETFs.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
Vanguard Global Aggregate Bond Index (Hedged) ETF | $4,006 | 0.20% | 4.31% | 12.35% | -2.42% | |
Vanguard Intl. Fixed Interest Index (Hedged) ETF | $1,020 | 0.20% | 3.18% | 9.58% | -3.36% | |
Global X US Treasury Bond (Currency Hedged) ETF | $618 | 0.19% | 4.76% | 8.53% | — | |
iShares Core Global Corporate Bond (AUD Hedged) ETF | $342 | 0.26% | 5.27% | 15.58% | -0.10% | |
iShares Global Aggregate Bond ESG (AUD Hedged) ETF | $347 | 0.19% | 4.18% | 12.75% | — | |
iShares Global High Yield Bond (AUD Hedged) ETF | $372 | 0.56% | 5.98% | 22.46% | 14.02% | |
iShares J.P. Morgan USD EM Bond (AUD Hedged) ETF | $74 | 0.51% | 11.35% | 25.89% | 2.38% | |
Vanguard Intl. Credit Securities Index (Hedged) ETF | $184 | 0.30% | 5.05% | 15.67% | -0.11% | |
BetaShares Global Green Bond Currency Hedged ETF | $218 | 0.49% | 3.76% | 12.45% | -4.73% | |
BetaShares US Treasury Bond 20+ Yr CCY Hedged ETF | $156 | 0.22% | 2.15% | -3.91% | -29.65% | |
VanEck 1-3 Month US Treasury Bond ETF | $110 | 0.22% | -9.00% | — | — | |
iShares U.S. Treasury Bond (AUD Hedged) ETF | $13 | 0.15% | 4.59% | — | — | |
iShares 20+ Year U.S. Treasury Bond (Hedged) ETF | $2 | 0.15% | 5.25% | — | — | |
Global X USD High Yield Bond (Currency Hedged) ETF | $19 | 0.30% | 5.45% | 20.92% | — | |
Global X USD Corporate Bond (Currency Hedged) ETF | $4 | 0.30% | 8.58% | — | — | |
PIMCO Global Bond Active ETF | $46 | 0.49% | 5.64% | — | — | |
JPMorgan Global Bond Active ETF | $7 | 0.45% | 6.06% | — | — | |
BetaShares Global Aggregate Bond Currency H ETF | $534 | 0.19% | — | — | — | |
iShares Core Global Aggregate Bond (AUD Hdg) ETF | $1 | 0.18% | — | — | — | |
BetaShares US Treasury Bond 7-10Yr CH ETF | $24 | 0.22% | 5.85% | — | — |
VBND at $4B is the dominant global bond ETF. It holds thousands of bonds across government and corporate issuers globally — the global equivalent of IAF/VAF. Its 4.31% one-year return is encouraging but the -2.42% five-year return reveals the same interest rate damage that hit domestic bond funds. WBND is BetaShares' newer equivalent at 0.19% MER, but has no return history yet.
US Treasury ETFs give direct exposure to US government bonds. USTB (broad US Treasuries) returned 4.76% over one year. US10 (7–10 year US Treasuries) returned 5.85%. IUSG is the cheapest at 0.15%.
GGOV is the extreme case — 20+ year US Treasuries. Maximum duration. Maximum rate sensitivity. The five-year return of -29.65% is one of the worst numbers in the entire ASX ETF universe. This fund makes sense only as a tactical bet on falling US rates. If rates stay high or rise further, it will continue to underperform. ULTB from iShares is an equivalent product with a 0.15% MER versus GGOV's 0.22%.
TBIL holds 1–3 month US Treasury bills — theoretically the safest bond instrument in the world. Its -9.00% one-year return may seem jarring until you realise this is an unhedged AUD return: the AUD strengthened against the USD over the period, wiping out the underlying USD returns. This is why global bond ETFs should be hedged.
Credit in global markets:
IHHY (global high yield) at 5.98% one-year and 14.02% five-year is the best long-term performer in this category among funds with a five-year track record. High yield means sub-investment-grade corporate bonds — higher default risk, higher return.
IHEB (emerging market bonds) returned 11.35% over one year and 25.89% over three years — the outlier in the entire bond universe. Emerging market bonds carry country risk and currency risk (though hedged to AUD), but the EM recovery cycle and higher yields have driven exceptional returns recently. This is a specialist allocation, not a core holding.
GBND holds global green bonds — debt issued to fund environmental projects. The portfolio is similar in credit quality to a global aggregate bond fund. The 3.76% one-year return is lower than VBND, and the -4.73% five-year return reflects the same duration pain. Investors pay 0.49% for the green label — a significant premium that hasn't delivered outperformance.
8. Fixed-Term Bond ETFs — 3 funds, new in 2025
Fixed-term or "target maturity" bond ETFs solve a problem traditional bond ETFs don't: they have a defined end date.
Ticker | Name | AUM ($M) | MER | 1Y Return | Maturity |
|---|---|---|---|---|---|
BetaShares 2028 Fixed Term Corp Bond Active ETF | $5 | 0.22% | — | 2028 | |
BetaShares 2029 Fixed Term Corp Bond Active ETF | $3 | 0.22% | — | 2029 | |
BetaShares 2030 Fixed Term Corp Bond Active ETF | $17 | 0.22% | — | 2030 |
BetaShares launched all three in May 2025. They hold Australian investment-grade corporate bonds that mature in or near the target year. At maturity, the fund winds up and returns capital to investors.
The key advantage: if you hold to maturity, you know your approximate return. Duration risk diminishes as the maturity date approaches. This makes them useful for bond laddering — spreading fixed income investments across different maturity dates to create predictable cash flows.
The 0.22% MER is reasonable. All three are too new for any meaningful return data. They'll appeal to SMSF investors matching income to known liabilities (think: pension payments, lump-sum expenses), and to investors uncomfortable with the permanent rolling duration of standard bond ETFs.
9. Active Bond ETFs — 11 funds
Active managers in fixed income have something to work with that equity managers don't: structural inefficiencies, pricing differences between bond issues, and duration positioning that can add genuine value. The track record across Australian active bond ETFs is mixed — but better than in equity ETFs.
Ticker | Name | AUM ($M) | MER | 1Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|---|---|
Coolabah Active Composite Bond Complex ETF | $806 | 0.30% | 5.09% | 19.82% | — | |
Ardea Real Outcome Bond Complex ETF | $163 | 0.50% | 6.58% | 12.10% | 10.30% | |
Schroder Australian High Yielding Credit Fund | $238 | 0.50% | 6.06% | — | — | |
Macquarie Dynamic Bond Active ETF | $103 | 0.61% | 4.21% | — | — | |
Macquarie Income Opportunities Active ETF | $94 | 0.49% | 5.21% | — | — | |
PIMCO Australian Bond Active ETF | $28 | 0.50% | 4.69% | — | — | |
PIMCO Diversified Fixed Interest Active ETF | $24 | 0.50% | 4.66% | — | — | |
Janus Henderson Australian Fixed Interest Active ETF | $8 | 0.38% | 5.13% | — | — | |
PIMCO Global Credit Active ETF | $15 | 0.61% | 8.29% | — | — | |
Janus Henderson Sustainable Credit Active ETF | $3 | 0.50% | 4.42% | — | — | |
iShares Credit Income Active ETF | $102 | 0.29% | — | — | — |
XARO from Ardea Investment Management is the standout active bond ETF with a proven track record. 6.58% over one year, 10.30% over five years. It uses a relative value approach — identifying mispricing between bonds without taking directional duration bets. That's why it held up through the rate-rising period when most bond funds were getting hurt. The 0.50% MER is expensive, but the five-year return justifies it versus passive alternatives.
FIXD from Coolabah Capital is the largest active bond ETF at $806M. It returned 5.09% over one year — beating IAF and VAF by a meaningful margin. Coolabah is a known credit-focused manager. The 0.30% MER is reasonable for active management.
HIGH from Schroders focuses on higher-yielding Australian credit — below investment grade. Returned 6.06% over one year. Too new for longer-term comparison.
The PIMCO suite (PAUS, PDFI, PCRD) launched in early 2025. PIMCO is one of the world's largest active bond managers. PCRD's 8.29% one-year return is eye-catching, but with only months of track record, it's premature to draw conclusions.
JPGB from JPMorgan returned 6.06% over one year. JFIX from Janus Henderson returned 5.13%.
For an analysis of whether active management adds value, see Active vs Passive ETFs. The short version: active fixed income has a better track record than active equities, and several funds here (XARO, FIXD, MQSD) have demonstrably added value.
10. Geared & Short Bond ETFs — 5 funds
These are leveraged or inverse bond products. They are trading instruments, not investment vehicles.
Ticker | Name | AUM ($M) | MER | 1Y Return |
|---|---|---|---|---|
BetaShares Geared Long Aus Gov Bond Complex ETF | $4 | 0.99% | -2.72% | |
BetaShares Geared Long US Tr Bond CH Complex ETF | $3 | 0.99% | 7.60% | |
BetaShares Geared Short Aus Gov Bond Complex ETF | $1 | 0.99% | 5.76% | |
BetaShares Geared Short US Tr Bond CH Complex ETF | $1 | 0.99% | -10.67% | |
VanEck Global Listed Private Credit (AUD Hedged) ETF | $223 | 0.65% | -16.25% |
GGAB and GGFD are geared long — they provide approximately 2x the daily return of Australian and US government bonds respectively. BBAB and BBFD are the inverse versions — they profit when bond prices fall (i.e., when rates rise). All charge 0.99% MER and have tiny AUM, reflecting how niche the market for these products is.
These funds compound daily — meaning their long-term returns can deviate significantly from their stated leverage multiple. They're designed for tactical short-term positioning, not buy-and-hold investing.
LEND from VanEck is a different kind of fund — it holds listed private credit vehicles. The -16.25% one-year return reflects this category's poor performance as listed private credit companies underperformed. This is one of the worst return figures in the entire bond ETF universe over the past year.
Cross-link: Leveraged ETFs Guide
11. ESG/Ethical Bond ETFs — 2 funds
Ticker | Name | AUM ($M) | MER | 1Y Return |
|---|---|---|---|---|
BetaShares Ethical Australian Composite Bond ETF | $70 | 0.34% | 3.14% | |
BetaShares Global Green Bond Currency Hedged ETF | $218 | 0.49% | 3.76% |
AEBD is BetaShares' ESG-screened Australian composite bond fund, launched in late 2024. At 0.34% MER, it's more than triple the cost of IAF/VAF. The one-year return of 3.14% is marginally below the non-ESG equivalent. For investors who require ethical screening, it's a reasonable option — but the fee premium is hard to justify on a risk-return basis.
GBND holds green bonds globally — debt issued by corporations and governments to fund environmental projects. The portfolio composition looks similar to a global aggregate bond fund; the green label is essentially a screening overlay. At 0.49% MER with a -4.73% five-year return (due to duration risk during the rate-rising cycle), it's one of the more expensive underperformers in this category.
The Yield Comparison
Yield is the reason most people hold bond ETFs. Here's where the yield actually sits across categories, based on recent one-year returns as a proxy:
Category | Representative Fund | Approximate 1Y Return |
|---|---|---|
Cash ETFs | AAA, BILL | 3.85% |
Australian Government Bonds | VGB | 2.93% |
Australian Composite Bonds | IAF, VAF | 2.95–3.04% |
Australian Corporate Bonds | CRED | 5.01% |
Floating Rate | QPON, FLOT | 4.53–4.77% |
Subordinated Debt | SUBD, BSUB | 5.45–5.48% |
Actively managed subordinated | MQSD | 6.24% |
Global High Yield | IHHY | 5.98% |
Emerging Market Bonds | IHEB | 11.35% |
The most striking finding is that Australian government bonds have underperformed cash over the past year — VGB returned 2.93% while AAA returned 3.85%. Government bonds are supposedly safer than cash, but cash ETFs have been the better investment. This is the duration risk story in a single comparison.
The yield pickup from government to corporate credit (2.93% → 5.01%) comes with meaningful credit risk but historically low default rates in investment-grade Australian issuers. The pickup from corporate to subordinated debt (5.01% → 5.45%) comes with capital structure risk. And the pickup from subordinated to high yield (5.45% → 5.98%) comes with genuine default risk exposure.
Each step up the yield ladder is a conscious decision to take on more risk. The question is whether you're being paid enough for it.
Risk vs Return Analysis
Plotting one-year return against volatility reveals a clear pattern — but with important outliers.
At the bottom left: cash ETFs. Low volatility, steady 3.85% return. These haven't disappointed anyone.
In the middle: Australian composite and government bond funds. Moderate rate-driven volatility. Returns of 2.95–3.06%. Objectively the worst risk/reward in the category — you take on interest rate risk but earn less than cash.
Upper middle: Investment-grade corporate bonds (CRED, ICOR), floating rate (QPON, FLOT), subordinated debt (SUBD, BSUB). These have delivered 4.5–6.2% with manageable volatility.
Outlier at top right: IHEB at +11.35%. Emerging market bonds are genuinely volatile — but the payoff over the past year has been significant.
Far left (catastrophic): GGOV at -29.65% over five years. And LEND at -16.25% over one year. Both are cautionary tales in different ways — one from duration risk, one from sector-specific underperformance.
The takeaway: for investors seeking pure capital preservation with income, the risk/reward in government bond ETFs has been poor. Floating rate and short-duration credit have delivered better outcomes per unit of risk.
Tax Treatment of Bond ETF Distributions
Bond ETF distributions are handled differently from equity ETF distributions — and most investors don't know this until they see their tax statement.
Bond distributions are not franked. Unlike equity ETFs such as VHY or SYI that pay heavily franked dividends (backed by corporate tax paid by Australian companies), bond ETF distributions carry no franking credits. Every dollar is taxed at your marginal rate, with no offset.
Most distributions are classified as interest income. Interest income does not qualify for the 50% CGT discount. If you hold a bond ETF for more than 12 months and then sell at a capital gain, that gain qualifies for the CGT discount — but the ongoing distributions don't.
For SMSF pension phase, this matters. In pension phase, investment income is generally tax-free. But the value of franking credits — which can be refunded in full in pension phase — is lost with bond ETFs. An Australian equity ETF paying 5% fully franked is worth significantly more in an SMSF pension fund than a bond ETF paying 5% unfranked. If tax efficiency is your primary concern and you're in SMSF pension phase, equity ETFs with franking credits have a structural advantage.
For accumulation phase investors in high tax brackets: bond income is taxed at marginal rates (up to 45% + Medicare). Equity dividends with franking credits effectively reduce this. It's not a reason to avoid bonds, but it's a reason to consider placement — holding bonds inside super (where the tax rate is 15%) and equities in taxable accounts (where franking offsets tax) can improve after-tax outcomes.
Cross-link: ETF Tax in Australia
Cross-link: ETF Distributions Explained
Where Bonds Fit in Your Portfolio
Bond ETFs serve three distinct roles, and which one applies to you determines which funds you should own.
Role 1: Cash buffer. For retirees and SMSF trustees drawing a pension, holding 12–24 months of expenses in AAA or BILL protects against having to sell equities during a market downturn. This is sequence-of-returns risk management. The cash ETF sits there, earns ~3.85%, and funds distributions while equities recover.
Role 2: Defensive allocation. Investors with a moderate risk profile (say, 60/40 growth/defensive) can use bond ETFs as the defensive allocation. The standard default here is IAF or VAF for broad Australian bond exposure, or VBND for global. Size depends on age and risk tolerance — 10% for a 35-year-old accumulator, up to 30–40% for a retiree.
Role 3: Income generation. Investors focused on regular income (not growth) can build a bond-heavy portfolio around SUBD, QPON, FLOT, and CRED — targeting 4.5–6% in annual income with lower volatility than equities.
If you already hold a diversified ETF: Check the bond allocation first. VDGR holds approximately 30% in fixed income. VDHG holds roughly 10%. If you're adding separate bond ETFs on top of a diversified fund, you're increasing your defensive allocation beyond what the label suggests. That might be deliberate — but make sure it's intentional.
For DIY two-fund portfolios (e.g., VAS + VGS): consider adding 10–20% in IAF or SUBD to introduce income and reduce portfolio volatility. This doesn't require a complete rethink — it's one additional ETF.
Cross-link: Best ETFs for Retirees
Cross-link: VDHG vs DHHF vs GHHF
Cross-link: 2-ETF vs Core Satellite
Key Takeaways
78 bond ETFs, $46B AUM — the largest ETF category by fund count. Most investors have no idea this many options exist.
Australian government bonds have been terrible over five years. VGB returned 0.44% over five years. AGVT returned -3.49%. RGB returned -3.72%. Rising rates from 2022 destroyed long-duration bond returns. "Safe" is not the same as "good."
Floating rate and subordinated debt have been the winners. SUBD returned 21.51% over five years. QPON returned 17.69%. Rate-insensitive structures plus 4.5–5.5% yields made these the standout performers of the rate cycle.
BILL (0.07%) is the cheapest cash ETF. ICOR (0.15%) is the cheapest corporate bond ETF. If fees matter to you — and they should — both are worth knowing.
Bond distributions are not franked. For SMSF pension phase investors, this reduces the relative tax efficiency of bond ETFs compared to fully franked equity ETFs. Plan accordingly.
Active managers have added value in bonds — unlike in equities. XARO delivered 6.58% over one year and 10.30% over five years. FIXD and MQSD have also outperformed their passive equivalents. Fixed income is one of the few categories where active management earns its fee.
Long-duration ETFs are a bet on falling rates — and massive risk if rates stay high. GGOV lost -29.65% over five years. ALTB returned 0.89% over one year. If you're using these, understand what you're owning.
Sources
Explore every ETF at ReviewETF.com.au. For weekly analysis, subscribe to the ETF Adviser Substack. Video breakdowns on the ReviewETF YouTube channel.
Past performance is not a reliable indicator of future performance. This article is general information only and does not constitute financial advice.
