UBS Global Asset Management has cross-listed the UBS Barclays TIPS 10+ UCITS ETF (UIMB) on Deutsche Börse’s Xetra and Frankfurt exchanges.
Andrew Walsh, Head of ETF Sales UK at UBS Global Asset Management.
Through tracking the Barclays Capital US Government 10+ Year Inflation-Linked Bond Index, the ETF provides exposure to US Treasury Inflation-Protected Securities (TIPS) with a minimum term of 10 years.
TIPS securities differ from regular Treasury securities in that the principal amount of a TIPS issue is adjusted over time to reflect changes in the underlying Consumer Price Index. TIPS pay interest twice a year at a fixed rate. Although the coupon rate for the TIPS issue is fixed throughout its life, it is applied to a principal amount which varies accordingly over time in response to the rate of inflation or deflation. As such, increases in inflation correspond to increased principal and coupon payments. Investors should note however that decreases in inflation would lower the dollar value of coupon and principal payments.
The fund trades in euros and has a total expense ratio (TER) of 0.20%.
UBS rolled out its suite of five US TIPS ETFs with the funds’ initial launches on the London Stock Exchange in November 2016. The ETFs, their trading currencies, and their TERs are listed below:
UBS Barclays TIPS 1-10 UCITS ETF (LON: UBTS) – GBP – TER: 0.20%
UBS Barclays TIPS 1-10 hedged GBP UCITS ETF (LON: UBTP) – GBP – TER: 0.25%
UBS Barclays TIPS 10+ UCITS ETF (LON: UBTL) – GBP – TER: 0.20%
UBS Barclays TIPS 1-10 hedged CHF UCITS ETF (SIX: TIP1S) – CHF – TER: 0.25%
UBS Barclays TIPS 1-10 hedged EUR UCITS ETF (SIX: TIP1E) – EUR – TER: 0.25%
Following the initial unveiling of the suite in London, Andrew Walsh, Head of UBS ETF Sales UK & Ireland, commented: “There is growing sentiment in markets that inflationary pressures may start to rise again after an extended period of low interest rates and the potential impact of nascent signs of fiscal stimulus from the US and elsewhere. With this innovative suite of ETFs our clients our able to protect long-term purchasing power and gain access to an asset class that compounds the real rate of return.”
Other ETFs providing exposure to the TIPS market include offerings from iShares and SSGA, namely the iShares $ TIPS UCITS ETF (LON: IDTP) which has a TER of 0.25% and the SPDR Barclays US TIPS UCITS ETF (LON: TIPS) which has a TER of 0.17%. Both ETFs track the Barclays US Government Inflation-Linked Bond Index, which tracks the performance of a broad range of TIPS with at least one year remaining to maturity.
In August 2016, Lyxor launched the Lyxor US TIPS UCITS ETF (LON: TIPU), also tracking the same index as the iShares and SPDR funds. The ETF is the cheapest UCITS ETF to offer exposure to the TIPS market with a TER of just 0.09%. It is available to trade in USD (Ticker: TIPU) and GBP (Ticker: TIPG).