UBS lists eight sterling-hedged ETFs to mitigate currency risk

Nov 28th, 2013 | By | Category: Equities

UBS Global Asset Management has announced the listing of eight new sterling-hedged exchange-traded funds (ETFs) on the London Stock Exchange (LSE).

UBS lists eight sterling-hedged ETFs to mitigate currency risk

Andrew Walsh, Head of ETF Sales UK at UBS Global Asset Management.

With central bank intervention in international markets continuing to affect currency markets, an increasing number of investors are recognizing the benefits of managing foreign currency exposures.

Aimed at sterling-based investors, the ETFs contain in-built currency hedges which allow investors to mitigate the risk of exchange rate fluctuations without having to actively manage a foreign exchange overlay themselves.

By reducing the impact of currency movements, investors in the ETFs are able to participate more accurately in the performance of the underlying reference index

Andrew Walsh, Head of UBS ETF Sales UK, explained: “These currency-hedged UBS ETFs are ideal building blocks for investors looking to minimize their currency risks. In this way, we are responding to a growing need of investors who would like to better hedge their portfolios against exchange rate fluctuations. For instance, investors can gain access to Japanese equities without having to worry about exchange rate fluctuations between the British Pound and the Japanese Yen.”

The ETFs are linked to the MSCI Japan, MSCI Canada, MSCI EMU and MSCI Switzerland indices and are available in both distributing and accumulating share classes.

The sterling-hedged ETFs on the MSCI Canada, MSCI EMU and MSCI Switzerland are the first of their kind to be listed on the LSE, while the MSCI Japan ETF has the lowest Total Expense Ratio (TER) in its class.

Commenting on the new ETFs, Peter Sleep, Senior Portfolio Manager at Seven Investment Management (7IM), said: “The new Japan GBP-hedged ETF from UBS is a valuable, low cost, addition to the investments available to ordinary investors who wish to invest in Japan without the risk of currency volatility.”

7IM is an independent investment manager with more than £5.2 billion in assets under management.

In addition to the new currency-hedged ETFs, UBS has announced the listing of seven new un-hedged share classes on various indices. These include ETFs linked to the MSCI United Kingdom, traded in sterling, the MSCI EMU and Euro Stoxx 50 traded in euros, and the MSCI Emerging Markets, MSCI Japan, MSCI World and CMCI Composite, all of which are traded in US dollars.

All 15 funds come with expense ratio ranging from 0.15% to 0.45%. Aside from the CMCI commodity fund, which is swap based, they are all physically replicated. Each of the funds will apply for UK reporting fund status and perform annual reporting for UK investors.

UBS manages some around £9 billion (as of October 2013) in ETF assets, making it one of the leading providers in Europe, in terms of assets under management. The firm’s ETFs are listed across a number of Europe’s leading stock exchanges, including the Borsa Italiana, Xetra, LSE, and SIX Swiss Exchange.

The 15 new ETFs are as follows:

USB newly listed ETFs

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