UBS rolls out S&P 500 ETF with GBP hedging

Nov 11th, 2016 | By | Category: Equities

European exchange-traded fund provider UBS Asset Management has listed the UBS S&P 500 hedged GBP UCITS ETF (USPG) on the London Stock Exchange.

UBS rolls out S&P 500 ETF with GBP hedging

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

The fund tracks the performance of the bellwether S&P 500 Index, the most widely followed reference for the performance of US large cap stocks, while hedging exposure to fluctuations in the US dollar/British pound exchange rate.

Andrew Walsh, Head of UBS ETF Sales UK & Ireland, commented: “This latest addition to UBS’s suite of currency-hedged ETFs offers investors access to what is regarded as the pre-eminent gauge of US large-cap equities with the added benefit of embedded GBP-hedging. We are seeing ever increasing demand from clients for currency hedged share classes at a time when global currency volatility remains a major concern for investors. The launch of our S&P 500 hedged GBP ETF is particularly timely given recent events in the US and we would expect to see this product gain a fair amount of interest.”

As of 11 November 2016, the S&P 500 has risen by 5.9% this year in US dollar terms. UK-based investors who were exposed to fluctuations between the US dollar and British pound would have gained significant additional returns over this period. For example, the British pound-denominated share class of the Lyxor S&P 500 UCITS ETF (LON: LSPX) is up 26.2% year-to-date. The pound experienced a sell-off immediately after the UK’s referendum on membership within the European Union where it lost 11.1% vs the dollar between the 23rd and 27th June 2016. It has depreciated by 14.8% against the dollar this year.

Investors may wish to adopt currency-hedged exposure going forward if they believe the pound has been oversold relative to the dollar and may experience a correction.

The range of S&P 500 ETFs provided by UBS now includes funds with currency hedging relative to the euro, Swiss franc, and British pound, as well as an unhedged ETF.

The fund’s total expense ratio (TER) is 0.22%.

British pound-hedged S&P 500 ETFs are also provided by iShares and Deutsche Asset Management with TERs of 0.45% and 0.30% respectively.

Several ETF providers in Europe offer ETFs with unhedged exposure to the S&P 500 Index. The cheapest of these is the Source S&P 500 UCITS ETF (LON: SPXS) with a TER of 0.05%.

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