Tue, 04/03/2014 - 10:01
Lyxor Asset Management is expanding its range of fixed income exchange-traded funds with the launch of double short ETFs on government bonds.
The new funds are: Lyxor UCITS ETF Daily Double Short 10Y US Treasury - C - USD; Lyxor UCITS ETF Daily Double Short 10Y Japan Govt Bonds - C-USD; and Lyxor UCITS ETF Daily Double Short 10Y UK GILTS - C-GBP.
Interest rates have reached levels close to 30-year lows, resulting in government bonds becoming relatively more exposed to downside risk. In the context of high levels of debt, slow growth and different patterns of fiscal reforms, there is a growing need for a suite of hedging tools to protect investors against a possible rise in long term government bond rates in all major currencies.
The Double Short ETFs on US Treasuries, gilts and Japan government bonds have been developed to respond to this need and complement the Lyxor ETF Daily Double Short Bond (EUR600m of assets) and Lyxor ETF Double Short BTP (EUR160m of assets). Thanks to their double short exposure, these ETFs allow for limited capital commitment and fees for a given nominal amount to be hedged.
François Millet, product line manager of ETF and indexing at Lyxor, says: “At a time where we can expect higher volatility in bond prices, we think it is opportune to propose new tools to investors to protect their portfolios against the risk of rising interest rates. Such tools can help investors avoiding the operational constraints that come from investing in derivatives.”
With the launch of these new offerings, Lyxor becomes the first ETF provider to offer a complete range of hedging instruments on major government bond issuances.
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