Lyxor reduces the fees charged to the Lyxor ETF Euro Cash (ISIN: FR0010510800)……
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The investment objective of the Lyxor ETF Euro Cash is to track the performance of the EuroMTS EONIA Investable Index (Bloomberg code: EMTSDEOI) (the “Index”). This Index measures the total return of a rolling deposit in the overnight interbank euro market. The Index is published daily using the Euro Over-Night Index Average (“EONIA”) computed by the European Banking Federation.
As the EONIA rate has recently fallen from 0.115% to 0.105%, Lyxor has decided to lower the fees charged to the fund in order to minimise the impact of this charge to investors. The reduction in fees will be reflected in a reduction of the effective rate of Operating and Management Fee, or ‘OMF’ (which includes external fees) to 0.085%.
The OMF will be applied to the daily Net Asset Value of the Lyxor ETF Euro Cash from September 3rd, 2012. The OMF rate will be reviewed on an ongoing basis in accordance with the prevailing EONIA cash rate. The maximum OMF will be limited to 0.15% (as set out in the prospectus of the fund).
The OMF rate is significant as it represents the cost of operating the fund, and as such, the OMF will directly affect the return offered by the fund. This change to the OMF will mean that the Lyxor ETF Euro Cash, which is one of the largest EONIA ETFs in the European market, will remain competitively priced relative to the EONIA rate.
The reduction in OMF for the Lyxor ETF Euro Cash will not be immediately reflected in the published Total Expense Ratio (TER) for the fund. This is because the TER published on the website and factsheets is based on the ongoing charges (including the average OMF) charged to the fund between November 2010 and October 2011. The decrease in the OMF rate will be reflected in the TER when it is next calculated in October 2012.
Calculating the effective TER from the OMF
As from September 3rd, 2012, the published fees would be:
• Applied Operating and Management Fees : 0.075% p.a.*
• Total Expense Ratio (for the accounting year ending in October 2011) : 0.15% p.a.
After October 2012:
A new TER (for the accounting year ending in October 2012) will be published and this TER will take into account the effective decrease of the OMF over the considered period.
*The OMF rate disclosed is equal to the rate applied to the last Net Asset Value (NAV) of the Fund and is not a reliable indicator of the rate applicable to future NAV. The effective rate of OMF that will be levied on the entire year could be higher or lower than the rate displayed, up to the maximum OMF disclosed in the Fund Prospectus, and will be reflected in the annual TER based on the past year expense for each year ending October.
Source: ETFWorld.co.uk – Lyxor