VanEck expands Tier 2 subordinated debt ecosystem with new Australian-first ETF

VanEck will be launching a new fund, the VanEck Australian Fixed Rate Subordinated Debt ETF (FSUB), on the ASX on 12 December 2025. The newest addition to VanEck’s fixed income suite will be an Australian first, complementing its award-winning SUBD strategy.

SUBD’s launch in 2019 marked the first time investors could directly access floating rate subordinated bonds issued by leading financial institutions (including the big four banks), and it has since become the largest of its kind in Australia, exceeding $3 billion in total assets. SUBD has been one of the most popular ETFs in 2025, attracting more than $1 billion of net flows.

FSUB complements SUBD by offering fixed-rate exposure within the same regulatory capital framework, enabling investors to access attractive nominal yields and diversify their rate exposure.

Arian Neiron, CEO and Managing Director of VanEck Asia Pacific, said: “The Australian subordinated debt market has grown to over $70 billion, with nearly half of new issuance now fixed-rate. APRA’s mandated total loss absorbing capacity (TLAC) requirements for banks and other authorised deposit-taking institutions are driving continued Tier 2 issuance (~$15 billion per year), and the imminent phase-out of hybrid securities has accelerated the structural shift towards subordinated debt.

“Financial institutions have shifted Tier 2 capital issuance to both floating and fixed rate to accommodate increased investor appetite for defined income and duration exposures. The launch of FSUB gives investors a complete subordinated debt solution.

“With the Australian yield curve steepening recently and the 10-year bond yield at a 12-month high, we think FSUB is well-positioned, offering investors the opportunity to access a fixed rate bonds portfolio that is currently yielding around 5.7 percent.” said Neiron.