FinEx launches currency hedged money market ETF on Moscow Exchange

May 19th, 2014 | By | Category: Fixed Income

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FinEx, a London-headquartered exchange-traded fund issuer with significant operations in Russia, has unveiled the FinEx Cash Equivalents UCITS ETF (FXMM), the first US money market ETF on the Moscow Exchange.

FinEx launches money market ETF on Moscow Exchange

FinEx has unveiled the first US money market ETF to list on the Moscow Exchange. (© Fitiss)

The fund, which has also been listed on the Irish Stock Exchange, is linked to the Solactive 1-3 Month US T-Bill Index, a newly launched index developed and calculated by Solactive.

Based in Frankfurt, Solactive is one of the world’s fastest growing index providers in the ETF space, with more than 125 ETFs tied to its indices and approximately $20 billion in total linked assets.

The new index has been designed to track the performance of the US Treasury bills (T-bills) market. T-bills are highly liquid short-term debt obligations backed by the US government with a maturity of up to one year. They are purchased at a discount to their face value, with the holder of the T-bill receiving full face value at maturity. T-bills make up 13.2% of the $11.6 trillion in marketable debt outstanding.

To be eligible for inclusion in the index, T-bills must have a time to maturity of 1 to 3 months and an amount outstanding of at least $250 million.

Astrid Ludwig, Head of the Bond & Complex Team at Solactive, said: “The Solactive 1-3 month US T-Bill Index is a great tool to follow the US government bond market in a context of expected rising interest rates as announced by the Fed recently. We are delighted that this index is being used by the first money market ETF in Russia.”

The ETF features an innovative RUB/USD currency hedge embedded via forward contracts. As of 14th May 2014, the Solactive 1-3 month US T-Bill index had 9 components for a performance of 0.34% (unhedged USD) and 26.08% (hedged version), based on back tested historical data since 31st December 2009.

Martin Bednall, Managing Director of ETFs at FinEx Capital Management, added: “The launch of the FinEx Cash Equivalents UCITS ETF provides the perfect solution to the needs of many Russian investors. Backed by AAA assets, a ruble investor can access high returns with maximum liquidity. This product really does open up the capital markets to all Russian investors looking for a safe place to hold their cash. For non-ruble investors this product is the first European ETF to offer a pure play on the Russian ruble”.

The ETF is physically replicated and has a total expense ratio (TER) of 0.49%.

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