Lyxor has recently launched the Lyxor $ Floating Rate Note UCITS ETF to help bond investors protect themselves from rising interest rates in the US……
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Name: Lyxor $ Floating Rate Note UCITS ETF
Distribution policy: accumulating
For investors who want exposure to the US corporate bond market, but are concerned by the prospect of rising interest rates, Lyxor’s new ETF provides exposure to USD denominated corporate bonds that increase their coupon as the 3 month Libor rate rises. So if rates rise, the yield is protected.
To help maintain liquidity, the index tracked by Lyxor’s ETF only invests in investment grade bonds with at least 2 years to maturity, and 500 million USD outstanding. Bonds issued more than two years ago, or from Emerging Market companies are excluded from the index universe.
In Europe, Floating Rate Bond ETFs have gathered nearly €2bn in net new assets this year as investors prepare themselves for America’s rate hikes (1). At 0.15%, Lyxor’s Total Expense Ratio is the lowest of any $ FRN ETF in Europe, continuing Lyxor’s commitment to cost and performance (2).
Francois Millet, Head of Product Line Management – ETFs & Indexing at Lyxor said: “For us it was important to create a simple, low cost way for investors to access the USD denominated FRN market. As a Luxembourg SICAV, this ETF will be attractive to investors right across Europe”.
For investors also concerned by the outlook for the Euro / USD exchange rate, Lyxor will be launching a Euro Hedged version shortly.
Lyxor has been building up its fixed income ETF range in recent years and has reached number two in Europe for Fixed Income ETFs with over EUR 13.5bn2 in assets under management (2).
1 Source : Lyxor International Asset Management. Data refers to the period between January 1st, 2017 and May 2nd, 2017.
2 Source : Lyxor International Asset Management. Data correct as of May 4th, 2017