Smart beta specialist Ossiam has become the second provider in Europe to launch an ETF that delivers positive returns when the shorter end of the US Treasury yield curve steepens against the longer end.
The Ossiam US Steepener UCITS ETF (USTP) is listed on Xetra with a total expense ratio (TER) of 0.30%.
It tracks the performance of the Solactive US Treasury Yield Curve Steepener 2-5 vs 10-30 index, which takes a long position in two-year and five-year Treasury futures and a short position in 10-year and 30-year Treasury futures.
USTP is leveraged 10x meaning for every one basis point increase, it will increase by ten basis points.
Bruno Poulin (pictured), CEO of Ossiam, said: “We have launched the USTP at a time when the US Treasury yield curve is at its flattest level since 2007 and many market participants are currently predicting its steepening.
“With this latest addition to our range of products, Ossiam offers investors easy access to a proven strategy used by many institutional investors to position their portfolio for a market regime shift.”
Ossiam is the second provider to launch an ETF of this kind. Lyxor became the first earlier this month after it launched the Lyxor US Curve Steepening 2-10 UCITS ETF (STPU).
The key difference is STPU takes a short position in only two-year US Treasury futures and a long position in 10-year futures and is just 7x leveraged.
Although these ETFs are added innovation to the European market, on ETF Stream’s Product Panel, Jose Garcia-Zarate, associate director, passive strategies, manager research, Europe, at Morningstar, warned STPU is for traders, not ETF investors.
“Flatteners and steepeners are classic tactical strategies in the bond trading world, but the average investor is highly unlikely to be familiarised with their intricacies, nor they need to be,” he continued.
“Many of these product launches are timed to piggyback on a potential trading opportunity, so in that sense I guess you can argue it is timely.”