Lyxor launches short-dated Gilt ETF

Aug 5th, 2016 | By | Category: Fixed Income

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Lyxor, Europe’s third largest provider of exchange-traded funds, has listed the Lyxor FTSE Actuaries Gilts 0-5Y (DR) UCITS ETF (GIL5) on the London Stock Exchange. The ETF is Lyxor’s first short-dated Gilt ETF and at 0.07%, will be the cheapest of its kind in the market.

Chanchal Samadder, Head of UK and Ireland ETF Sales at Lyxor

Chanchal Samadder, Head of UK and Ireland ETF Sales at Lyxor

The fund tracks the FTSE Actuaries Govt Securities UK Gilts TR under 5 Yr Index, which consists of UK government securities with up to 5 years to maturity. The index forms part of the conventional index family of the FTSE Actuaries UK Gilts Index Series, which includes all British Government Securities quoted on the London Stock Exchange.

The FTSE Actuaries UK Gilts indices are among the industry’s most widely-used performance benchmarks for the UK Government bond market. They are sanctioned by the UK Actuaries and are also used for benchmarking pension benefits, obligations and mutual funds.

As of 3 August 2016, the index has 14 components with a maturity breakdown of 1-3 years (56.0%) and 3-5 years (44.0%).

Coincidentally the launch follows just one day after the Bank of England’s (BoE) Monetary Policy Committee (MPC) meeting, which saw it slash benchmark interest rates to historic lows as part of further stimulus measures. Short-dated Gilt exposures were well positioned to benefit from the fall in short term rates while long-dated Gilts might be at risk from the inflationary pressure of a weaker pound.

This new exposure completes Lyxor’s range of Gilts ETFs. The other ETFs in the suite include the Lyxor FTSE Actuaries UK GILTS (DR) UCITS ETF (LSE: GILS), providing investors with exposure to a full range of Gilt maturities; and the Lyxor FTSE Actuaries UK Inflation- Linked Gilts (DR) UCITS ETF (LSE: GILI), which offers inflation-protected Gilts exposure. All ETFs have a TER of 0.07%.

Chanchal Samadder, Head of UK and Ireland ETF Sales at Lyxor, commented: “We have a clear ambition to be the number one choice for core fixed income ETFs. This isn’t just about lower fees, but providing the right exposures, and using the right replication. This new ETF means we can now offer low cost, simple exposure to both the long and short end of the gilts market.”

Other ETFs to offer short-dated Gilt exposure include the iShares UK Gilts 0-5yr UCITS ETF (LSE: IGLS), which has over £970m in assets under management (AUM) and a TER of 0.20%; the db X-trackers IBOXX £ Gilts 1-5 UCITS ETF (LSE: XG5D) which has £5m in AUM and a TER of 0.20%; and the SPDR Barclays 1-5 Year Gilt UCITS ETF (LSE: GLTS), which has £360 AUM and a TER of 0.15%.

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