Fixed Income Securities

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What are Fixed Income Securities?

Fixed Income Securities, otherwise known as Interest Rate Securities, are debt investments that pay a fixed or floating rate of return. As an investor, you are lending money to the issuer — in return, the issuer pays you interest, and promises to repay the issue price at a specific time. There are three main types of Fixed Income Securities traded on the ASX: Australian Government Bonds, Corporate Bonds and Hybrid Securities.

Fixed Income Securities provide regular income compared to ordinary shares, with the opportunity to profit from interest rate movements.

How it works

Interest Rate Securities are traded and settled in the same way as shares listed on the ASX. As a CommSec client, you can trade all the Interest Rate Securities that are available on the ASX.

Access current price information on the website using the ASX code.
View charts and other data.
Place an order just as you would for a share trade.

Exchange traded bonds (XTBs)

XTBs are securities backed by an underlying bond. Coupon and principal payments from the bond usually flow through to the XTB investor.

Exchange traded funds (ETFs)

Fixed income ETFs provide exposure to a professionally managed portfolio of investment-grade bonds and aim to track a particular bond or index.

Learn more about ETFs.

Australian Government Bonds (AGBs)

An AGB can generally make fixed interest payments (called coupons), biannual or quarterly and return the face value (or face value plus CPI adjustment for Indexed bonds) at the maturity date.

Unlisted Bonds for Sophisticated Investors

CommSec has partnered with CommBank Investor Sales to provide unlisted or over-the-counter (OTC) bond investments to Sophisticated and Wholesale clients with investible assets greater than AUD $10m available to invest in $500,000 minimum parcels. To be eligible you must register your Sophisticated Investor status with CommSec through the provision of a Certified Accountants certificate. Please speak to your CommSec One relationship manager for further details.

Benefits

The benefit and risk profile changes according to the investment vehicle chosen to access fixed income. At a high level, the key benefits and risks of fixed income investments may include:

Reduced volatility and regular income

As a general rule, fixed income investments are less volatile than equities and provide investors with predictable returns.

Liquidity

Unlike term deposits, where your funds are locked in for a predetermined period of time, you can sell your listed fixed income investments – such as XTBs, ETFs, or AGBs – on market if you want to free up funds.

Diversification

Fixed income may help you diversify your investment portfolio into cash-type investments.

Risks

Liquidity

The liquidity of some fixed income securities may be lower than other ASX listed securities, such as equities.

Interest rate risk

For certain fixed income securities that pay a fixed return, there is a possibility that the rate of interest you receive might not be in line with the market rate at the time. Changes in interest rates and the accrual of interest since the last coupon payment may also impact the price of your fixed income investment.

Credit risk

Credit risk is the risk that the issuer may not be able to repay the promised return or the principal amount at the maturity date. This is partially reflected by the different rates of interest paid.

Please note that this is not an exhaustive list of risks and potential investors should refer to the relevant offer document.

Rates and fees

Brokerage Rates

Trade execution	Brokerage fee amount by transaction value^1,2,3,4
Trade online (via website, mobile apps or other platforms) and settle your trade to a CDIA⁵ or CommSec Margin Loan⁵	$5.00 (Up to and including $1,000) $10.00 (Over $1,000 up to $3,000 (inclusive)) $19.95 (Over $3,000 up to $10,000 (inclusive)) $29.95 (Over $10,000 up to $25,000 (inclusive)) 0.12% (Over $25,000)
Trade online (via website, mobile apps or other platforms) and settle into a bank account of your choice	$29.95 (Up to and including $9,999.99) 0.31% ($10,000 and above)
Trades over the phone and deceased estates⁶	$59.95 (Up to and including $10,000) 0.52% (Over $10,000 up to $25,000 (inclusive)) 0.49% (Over $25,000 up to $1,000,000 (inclusive)) 0.11% (Over $1,000,000)
Trades requiring settlement through a third party⁶	$99.95 (Up to and including $15,000) 0.66% (Over $15,000)
¹Different brokerage rates apply to CommSec Pocket trades executed through CommSec Pocket App or CommBank App. ²Alternative brokerage rates may be agreed from time to time and (if agreed to) will be payable under clause 22 of CommSec's Share Trading Terms and Conditions. If you are offered, and agree to a tiered brokerage rate, this may result in brokerage charges that differ from rates expressly disclosed within the CommSec FSG. ³Unless otherwise indicated, where a fee or charge is expressed as a percentage, it refers to a percentage of the transaction value. For GST rounding reasons, the final brokerage fee may result in a slight variance from the stated or expected charge, which may exceed two cents for large trades. ⁴Brokerage charged (shares, warrants, listed managed investments and derivatives): Brokerage at these rates applies each time you trade a stock, warrant, listed managed investment or derivative. ⁵To be eligible, you must trade online, be CHESS Participant Sponsored with CommSec and settle your trades through either a Commonwealth Direct Investment Account (CDIA) or a CommSec Margin Loan. ⁶Includes CommSec Margin Lending and Geared Investments Lending Trades and where the Commonwealth Bank exercises its rights under the loan terms and conditions.

Management Expense

Fund managers and issuers charge a fee for their professional management of ETFs and XTBs. You can find the Management Expense Ratio in the relevant Product Disclosure Statement (PDS).

Get started

Open a CommSec Share Trading Account to invest in Interest Rate Securities

Be up and running in as little as 5 minutes. Start by choosing one of the options below:

Already have a CommSec Share Trading Account?

If you have a CommSec Share Trading Account, login and search for Interest Rate Securities.

Don't have a CommSec Share Trading Account?

As a CommSec client, you can trade all the Interest Rate Securities that are available on the ASX. Join now to open a standard Share Trading Account and select ‘Open a CDIA'¹.

Join now >

Frequently asked questions

What is a bond?

A bond is a debt security, rather than a share. Bonds are usually issued by governments and large corporations in return for a principal amount on which interest is paid to the investor for a specified time. The interest rate is fixed. The principal amount invested is repaid to the investor on maturity.

What are exchange traded bonds (XTBs)?

XTBs are fixed interest securities traded on ASX. They bring together the predictable income and capital stability of corporate bonds, with the transparency and liquidity of the ASX market. They offer access to the performance and benefits of corporate bonds, which are normally not available directly for all investors.

How do I start trading ETFs?

All you need to start trading ETFs listed on the ASX is a CommSec trading account.

What are other considerations for investing in XTBs?

Select how often to receive income – coupon frequency varies with each XTB
Choose your level of income – choose an XTB to suit your income requirements and risk appetite
Control how long you wish to invest - Different XTBs also have different maturities

Why add fixed income to my portfolio?

While shares and property are considered growth assets, fixed interest is more of a defensive asset, which generally means it is a safer option with more predictable returns.

What are the benefits of trading AGBs?

Some of the benefits associated with investing in AGBs are listed below.

A secure, regular and stable income stream
Exchange-traded AGBs provide you with a regular income stream. They have one of the lowest credit risks of any financial product.

Hedge against inflation
Certain types of treasury bonds have their face value (and coupons) adjusted for movements in the Consumer Price Index (CPI).

Financial Services Guide

The Financial Services Guide ("FSG") provides information about Commonwealth Securities to help you decide whether to use the financial services we offer.

Download the Financial Services Guide

Share Trading Terms and Conditions

For a complete outline of what your obligations are when you buy or sell shares through CommSec please review the Share Trading Terms and Conditions document.

Download the Share Trading Terms and Conditions

Other Forms & Brochures

For all other forms & brochures regarding other financial services we offer.

If you are looking for administrative forms, please login and proceed to Support > Forms & Brochures.

Disclaimer

¹ The Commonwealth Direct Investment Account is issued by Commonwealth Bank of Australia and administered by Commonwealth Securities Limited. The target market for the CDIA can be found within the product’s Target Market Determination, available at commbank.com.au/tmd.

You can view the product Terms and Conditions, Product Disclosure Statement, Best Execution Statement, Financial Services Guide and should consider them before making any decision about these products and services.