Amundi to switch six euro government bond ETFs to physical replication

Oct 23rd, 2019 | By | Category: Fixed Income

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French ETF issuer Amundi has announced upcoming changes to the replication method of six of its euro government bond ETFs.

Amundi switches six euro government bond ETFs to physical replication

Amundi is planning to switch six euro government bond ETFs to physical replication.

The ETFs in question presently use a synthetic or swap-based approach to deliver the performance of their underlying indices.

However, on 15 November 2019, the funds will switch to direct physical replication.

Five of the ETFs are linked to FTSE MTS Indices that target investment-grade bonds from different maturity segments.

The sixth is linked to a Markit iBoxx Index that focuses on inflation-linked government bonds from across the yield curve.

To reflect the change in the replication method, the funds will adopt the ‘DR’ suffix indicating ‘Direct Replication’.

According to Amundi, its approach to index replication is determined by client demand, and the firm continues to offer synthetic replication where applicable.

In a statement, it said, “Both physical and synthetic replication have their pros and cons, in terms of efficiency, cost, and performance.

“Amundi ETF has different types of investors, with different needs, and some prefer one or the other replication. We, therefore, have a very pragmatic approach, offering the products required by our clients, in accordance with their preferences.

“Finally, it is important to remember that for both replication methods, Amundi provides investors with the same level of commitment, transparency and risk control framework.”

The affected ETFs are as follows:

Amundi ETF Govt Bond EuroMTS Broad Investment Grade 1-3 UCITS ETF DR (C13 FP)
Amundi ETF Govt Bond EuroMTS Broad Investment Grade 3-5 UCITS ETF DR (C33 FP)
Amundi ETF Govt Bond EuroMTS Broad Investment Grade 5-7 UCITS ETF DR (C53 FP)
Amundi ETF Govt Bond EuroMTS Broad Investment Grade 7-10 UCITS ETF DR (C73 FP)
Amundi ETF Govies 0-6 Months EuroMTS Investment Grade UCITS ETF DR (C3M FP)
Amundi ETF Euro Inflation UCITS ETF DR (CI3 FP)

The ETFs are listed on Euronext Paris.

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