Since launching the partnership in March 2015, the investment management arm of Swiss independent bank Lombard Odier has listed a number of Ucits compliant fundamentally-weighted fixed income ETFs in partnership with UK-based ETP specialist ETF Securities.
The currency-hedged share class of the fund provides a means of gaining exposure to foreign assets while providing greater investor protection against the impact of adverse currency movement. It should also allow investors to obtain a “purer” exposure to the underlying asset.
Greater protection
Kevin Corrigan, head of fundamental fixed income, Lombard Odier IM, said: “The continuing volatility of currency markets has driven bond investors to seek solutions which provide greater protection from adverse fluctuations in foreign exchange rates.
“By using a hedged share class, an investor is safeguarded from a divergence in performance between the index returns in its local currency and the returns of a non-hedged ETF product that is listed in a different currency. The ongoing success of the partnership with ETF Securities has added to our ability to develop these solutions, which directly address investor needs.”
“By using a hedged share class, an investor is safeguarded from a divergence in performance between the index returns in its local currency and the returns of a non-hedged ETF product that is listed in a different currency."
Volatility set to continue
Howie Li, co-head of CANVAS, ETF Securities’ ‘build-you-own ETF’ service, said: “With increased currency volatility in 2015 that’s likely to continue this year, portfolio managers have become keenly aware of the impact of foreign exchange movements in their portfolios.
“This latest development in our range of smart beta fixed income ETFs is in response to the investment community’s need to manage their currency risk. ETPs are proving a popular choice for currency and currency-hedged investments.
“ETF Securities currently has more than $500m (£345.2m, €460.4m) of AUM across its range of currency-hedged and foreign exchange ETPs and extending this to our fixed income ETFs with Lombard Odier IM enables us to continue to support our investors’ needs across different asset classes,” Li said.
