Amundi rolls out currency hedged corporate bond ETF

May 10th, 2016 | By | Category: Fixed Income

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Exchange-traded fund provider Amundi has launched a new currency hedged share class on its corporate bond ETF adding to its range of funds. The USD-denominated Floating Rate Notes ETF tracks the Markit iBoxx USD Liquid FRN Investment Grade Corporates 100 index.

Amundi captures over 40% of strong emerging market ETF inflows during March

Fannie Wurtz, Managing Director at Amundi ETF, Indexing & Smart Beta.

The index gives exposure to the USD-denominated investment grade Floating Rate Notes (FRN) market via holdings of between 40 and 100 highly liquid USD denominated FRNs, issued by corporates from developed countries.

The launch of the new currency-hedged share class comes in response to investor demand for exposure that combines a hedge against both potential interest rate hikes and currency volatility.

According to a note from Amundi, in an environment of low interest rates and expectations of rate hikes, Floating Rate Notes can allow investors to lower their exposure to interest rate moves. FRNs have a low degree of price sensitivity to interest rates as their coupons follow interest rates trends.

Fannie Wurtz, Managing Director of Amundi ETF, Indexing & Smart Beta, said in a statement: “Amundi has been developing a full range of fixed income ETF exposures to support investors in all market conditions. This new investment tool meets investors’ needs to capture potential yield in USD-denominated floating rate notes, while at the same time limiting the impact of USD/EUR exchange rate volatility.”

Amundi ETF was the first ETF provider in Europe to offer exposure to EUR-denominated Floating Rate Notes in 2014 and to offer a USD declination in May 2015.

The ETF has an ongoing charge of 0.20%.

 

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