Lyxor expands yield curve ETF range

Philippe Bache Lyxor

Europe’s third largest ETF provider Lyxor has expanded its yield curve ETF range with the launch of three products that play different parts the bond market.

The move follows the French asset manager’s launch of the first of its kind ETF in Europe in August, the Lyxor US Curve Steepening 2-10 UCITS ETF (STPU) that delivers positive returns when two-year Treasury yields steepen against the 10-year.

Lyxor has backed this launch up with the Lyxor US Curve Flattening 2-10 UCITS ETF (FLTU) which enables investors to express the opposing view.

The firm has also brought to market the equivalent exposures to the 2-10 year segment of the German bund yield curve through the Lyxor EUR Curve Steepening 2-10 UCITS ETF (STPE) and the Lyxor EUR Curve Flattening 2-10 UCITS ETF (FLTE).

All four ETFs track Solactive indices and are leveraged 7x meaning for every 0.01% move, the funds will move 0.07%.

The ETFs have total expense ratios (TERs) of 0.30%.

Philippe Baché (pictured), head of fixed income ETFs at Lyxor, commented: “Our priority is making sure that investors have all the tools they need to invest in these ever-changing markets.

“Views on the direction of interest rates differ among investors, and our innovative ETFs allow them to express their beliefs on the future shape of benchmark yield curve.”

However, on the launch of STPU, Jose Garcia-Zarate, associate director, passive strategies research at Morningstar Europe, warned this product is for traders not for investors.

He added: “In very broad terms there are two types of ETFs, those that can be classed as investment vehicles and those that are trading (some would say “gambling”) vehicles. This one falls in the latter camp.

“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.”

Leave a Reply

Your email address will not be published - please refer to our privacy policy to see how your details are handled.