Reported about 1 year ago
Taiwan's first bond ETF to adopt the 'credit factor weighted' approach, the Yuanta Optimum Non-Investment Grade Bond ETF (00953B), has been approved by the FSC for fundraising, with public offering scheduled for August 5 at an issuance price of 10 NTD. With a mechanism for price stabilization, the ETF features an interest rate locked above 6%. By focusing on non-investment grade bonds, 00953B aims to align its risk closer to investment-grade bonds, making it suitable for conservative bond investors. The ETF tracks the ICE 1-5 Year BB-B Rated Developed Market Credit High Yield US Dollar Non-Investment Grade Bond Index, selecting bonds based on credit rating, credit spread, country, and liquidity factors. The unique 'credit factor weighting' methodology used for the index gives higher weight to bonds with better credit ratings and lower credit spreads, reducing default concerns and leaning towards investment-grade bonds. As the interest rate hike cycle nears its end, bond prices are expected to rise with a potential shift to rate cuts in the future, especially benefiting non-investment grade bonds and offering investment opportunities for capital gain-seeking investors.
Source: YAHOO