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UBS Asset Management announces launch of new short-term emerging market bonds ETF

UBS AM are the first asset manager to offer an ETF on an all new index capturing performance of short term emerging-market bonds, issued by sovereigns as well as corporates……

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UBS Asset Management  today announces the launch of its UBS ETF (LU) J.P. Morgan USD EM Diversified Bond 1-5 UCITS ETF (ISIN: LU1645385839). The new exchange-traded fund tracks the J.P. Morgan USD Emerging Markets Diversified 3% capped 1-5 Year Bond Index.

This ETF gives investors access to emerging market Sovereign bonds, quasi-Sovereigns and corporate bonds with remaining maturity of between one and five years in a simple and cost-efficient manner.  It is aimed at delivering a yield pick-up relative to developed market fixed income exposures. As well as exposure to a large range of bonds, the ETF allows for broad geographical diversification across more than 60 countries.

The bonds contained in the index are exclusively denominated in US dollars. It includes both fixed and floating rate securities with amounts outstanding in excess of USD500 million. Country weights are capped at 3% to reduce single country concentration.

The underlying index contains selected short-term, liquid and higher credit quality securities from the flagship indices of J.P. Morgan CEMBI Broad Diversified (corporate bonds) and JP Morgan EMBIG Diversified (Sovereign and quasi- Sovereign bonds). For Sovereigns, only bonds issued from EM countries with Gross National Income per capita below the index income ceiling (IIC) for 3 consecutive years will be eligible. An eligible corporate issuer must meet one of the following criteria: (1) headquartered in an EM country or (2) 100% of the issuer’s assets are within EM economies, or (3) issuer must have 100% secured assets within EM economies.

Simone Rosti, Head of Passive & ETF Specialist Sales Europe at UBS Asset Management, says: “With this launch, UBS Asset Management is reinforcing its fixed income product suite by offering investors the opportunity to invest in this distinct emerging market asset class. This is the first ETF to blend together EM sovereign and corporate bonds targeting short duration. It also uses a 3% country capping which is shown to deliver a better risk return profile compared to uncapped EM fixed income indices.”

UBS ETFs has gathered over USD10 billion in net new assets thus far in 2017, 20% of which has been into fixed income products. Following on from the success of the All Maturities Emerging Markets Sovereign Bond ETF launched last year, UBS ETFs are expecting strong demand for these products throughout 2018.

ISIN

Name

Trading CCY

TER

Dist.

Bloomberg

SEDOL

LU1645385839

UBS ETF –  J.P. Morgan USD EM Diversified Bond 1-5 UCITS ETF

GBX

0.42%

Yes

SEMC LN

BFCBMP4

Source: ETFWorld

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