Goldman Sachs launches UK gilts ETF

Sep 7th, 2021 | By | Category: Fixed Income

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Goldman Sachs Asset Management has launched a new fixed income ETF in Europe providing low-cost exposure to UK government bonds, also known as gilts.

Goldman Sachs launches UK gilts ETF

Several ETF providers offer low-cost UK gilt ETFs in Europe.

The Goldman Sachs Access UK Gilts 1-10 Years UCITS ETF (GBPG LN) has been listed on London Stock Exchange in pound sterling.

The fund is linked to the FTSE Goldman Sachs UK Gilts 1-10 Years Index which consists of fixed-rate debt issued in pound sterling by the UK government. Eligible issues must have a remaining time to maturity between one and ten years.

Each month, the index divides the eligible bonds into the following four maturity buckets: 1-3 years, 3-5 years, 5-7 years, and 7-10 years. Bonds are weighted by market value within each maturity bucket.

The weight of each maturity bucket is then determined using an optimization process that seeks to maximize the index’s projected one-month return (assuming constant yield curve and option-adjusted spread) while limiting deviations in the index’s modified duration and the weight of the maturity buckets relative to the parent universe.

The ETF comes with an expense ratio of 0.07% and makes distributions on a semi-annual basis.

The fund’s fee matches the cost of UK gilt ETFs from BlackRock, Vanguard, and Lyxor. Invesco, however, offers two UK gilt ETFs providing broad and short-maturity exposures which come with slightly cheaper expense ratios at 0.06%.

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