UBS launches three bond ETFs on Xetra

Nov 8th, 2017 | By | Category: Fixed Income

UBS has launched three new fixed income ETFs on Deutsche Börse’s Xetra and Frankfurt exchanges, providing access to emerging market corporate bonds, as well as different maturity segments of the inflation-linked euro government bond universe.

UBS launches three bond ETFs on Xetra

The three new ETFs offer access to emerging market corporate bonds, as well as different maturity segments of the inflation-linked euro government bond universe.

Two of the new bond ETFs enable investors to participate in the performance of euro-denominated, inflation-linked government bonds with an investment grade rating. These two ETFs differ in regards to the maturities of the underlying bonds.

The UBS Bloomberg Barclays Euro Inflation Linked 1-10 UCITS ETF (FRC3 GR) tracks the Bloomberg Barclays Euro Government Inflation-Linked 1-10 Year Index, providing exposure to bonds situated at the front end of the maturity curve with a term of between one and ten years. Its total expense ratio (TER) is 0.20%.

The UBS Bloomberg Barclays Euro Inflation Linked 10+ UCITS ETF (FRC4 GR) provides exposure to the longer-duration end of the maturity spectrum by tracking the Bloomberg Barclays Euro Government Inflation-Linked 10+ Year Index. The fund’s TER is also 0.20%.

Inflation-linked securities differ from regular government securities in that the principal amount of the issue is adjusted over time to reflect changes in an underlying price index.

Although the coupon rates of these issues are generally fixed throughout their life, it is applied to a principal amount which varies accordingly over time in response to the rate of inflation or deflation. As such, increases in inflation correspond to increased principal and coupon payments. Investors should note however that decreases in inflation would lower the value of the coupon and principal payments.

The firm’s other fixed income launch is the UBS JP Morgan USD EM Diversified Bond 1-5 UCITS ETF (SEAA GR) which enables investors to invest in a diversified portfolio of different corporate bonds from emerging market countries with terms of one to five years. The fund tracks the JP Morgan USD EM Diversified 3% capped 1-5 Year Bond Index, and has a TER of 0.42%.

The ETFs are expected to roll out across other major European stock exchanges shortly.

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