iShares Core Composite Bond ETF (IAF) — Review & Analysis

IAF is one of the largest fixed income ETFs on the ASX with AUM of $3.60 billion as at May 2026, tracking the Bloomberg AusBond Composite 0+ Yr Index. The fund holds investment-grade Australian fixed income securities — Australian Treasuries (46.4%), government-related issuers (43.1%), corporate bonds (10.1%) and a small allocation to covered bonds. The 0.10% p.a. management fee is highly competitive in the bond cohort. Compare IAF across the fixed income ETF page.

IAF's structure is a classic broad bond market tracker — Australian government and government-related issuers dominate at ~90% of holdings, with limited credit risk. Average duration sits around 5-6 years, meaning IAF's unit price moves meaningfully with interest rate changes. When yields fall, IAF rises; when yields rise, IAF falls. That duration is the fundamental difference from cash ETFs like AAA or BILL, which have negligible duration risk.

IAF's closest peers are VAF (Vanguard Australian Fixed Interest ETF) and BOND (SPDR S&P/ASX Australian Bond Fund), both tracking similar Australian composite bond benchmarks at comparable fees. The differentiators are mostly issuer brand and minor index methodology differences — IAF, VAF and BOND deliver functionally similar exposure for a diversified Australian bond allocation.

IAF works as core fixed income exposure for investors building diversified portfolios — the duration risk acts as a counterweight to equity volatility, while the high government weighting limits credit risk. The fund is unhedged (irrelevant for AUD-denominated Australian bonds). Our bond and fixed income ETFs guide covers IAF alongside every other bond ETF on the ASX.