UBS has launched an interest rate hedged ETF targeting US corporate bonds.
The UBS ETF (LU) Barclays US Liquid Corporates fund, which is listed on the London Stock Exchange, will try to manage the risks of rising interest rates by taking out the credit risk of the bonds.
Specifically, the fund will track the Barclays US Liquid Corporates Index, which is a market cap weighted index which is exposed to liquid corporate bonds issued by investment grade companies from various sectors.
UBS head of ETF sales for the UK & Ireland Andrew Walsh says: “Those wishing to benefit from the favourable economic climate by investing in corporate bonds should consider minimising the interest rate risk in their portfolio.
“The mitigation of interest rate risk means that the bond portfolio becomes largely unaffected to interest rate hikes. This new UBS ETF with its interest rate hedge offers pure credit exposure in a cost-effective way.”
The ETF will have total expense ratio of 0.23 per cent.
UBS currently offers 215 ETFs, with 142 in equities, 37 in bonds and the rest in commodities, precious metals, hedge funds, real estate, and multi asset portfolio.