ETF Securities and Lombard Odier IM launch Switzerland’s first range of fundamentally-weighted smart beta fixed income ETFs
- Switzerland’s first range of fundamentally-weighted smart beta fixed income ETFs
- Investors gain easy access to euro corporate, global corporate, global government and emerging market local government bonds
- Transparent, cost-effective and UCITS-compliant portfolio building block for core allocation to fixed income
ETF Securities, one of the world’s leading innovators of exchange traded products (ETPs), and Lombard Odier Investment Managers (Lombard Odier IM), a pioneer in smart beta fixed income investing, have today listed a range of transparent, cost-effective and UCITS-compliant fundamentally-weighted fixed income ETFs on the SIX Swiss Exchange.
Until now, Lombard Odier IM’s fundamental fixed income strategies were only available to mutual fund investors. However the following ETFs, developed in partnership with ETF Securities, offer easy access to smart beta bond opportunities to a wider base of investors: the Euro Corporate, Global Corporate, Global Government, and Emerging Market Local Government Bond Fundamental ETFs, which were listed on the London Stock Exchange earlier this year, have so far amassed over US$100mn in assets under management.
Advantages of the fixed income smart beta ETF approach
The majority of fixed income investors are invested in strategies that follow a traditional market capitalisation approach, which results in investors lending more to the issuers with the most debt. The new approach offered by ETF Securities and Lombard Odier IM’s products assesses fundamental factors for government and corporate issuers. Thus, it encourages bond investors to think of themselves as lenders and the strategy prioritises a borrower’s capacity to repay their debts, rather than their capacity to borrow more. For governments, the factors include size of revenues measured by GDP, level of indebtedness utilising debt-to-GDP, along with indicators for fiscal and political stability. For corporate issuers, each sector’s contribution to the economy is looked at before assessing each individual issuer’s revenues, level of indebtedness, cash flow and asset quality. ETF Securities and Lombard Odier IM believe this produces a more favourable balance between risk and return for investors.
Rationale for ETF investing
The new suite of ETFs can be used by investors as simple, effective and low-cost portfolio building blocks, providing a core allocation to fixed income. The products are eligible to meet the growing investor appetite for smart, low-cost, diversified fixed income investment solutions, offering the typical characteristics of index-based ETFs, namely their intraday liquidity combined with the transparency afforded by the stringent regulatory standards required for indices.
Jérôme Collet, Senior Portfolio Manager, Fundamental Fixed Income at Lombard Odier IM commented:
“We’re delighted to be working with ETF Securities to make our fundamentally weighted approach, developed over more than five years, available to Swiss investors. At a time of heightened uncertainties around certain markets and investors’ concerns around liquidity, it makes more sense than ever to pay attention to the long-term quality and liquidity of bond investments. Our approach is designed to look first-and-foremost at the credit quality of liquid issuers at a reasonable price.”
Bernhard Wenger, Co-Head of European Distribution, ETF Securities added:
“We’re very pleased to be listing these ETFs on the SIX Swiss Exchange. Switzerland is an important growth market for us and we are fully committed to making our products accessible to all investor types. With bond liquidity increasingly being a source of concern for investors, investors in ETFs have extra liquidity support from the secondary market to help mitigate this. This liquidity support coupled with the ability to trade intraday makes the ETF an ideal access route into fixed income at a time when liquidity matters. This is the first time that fundamental fixed income is available to Swiss investors in an ETF wrapper and we look forward to launching further offerings in the future.”
“With recent volatility in the European currency market, our hedged range, due to be launched later this year, will provide investors with greater protection from adverse movements in CHF, EUR and GBP, ensuring they obtain a pure exposure to the underlying asset. We are delighted with the ongoing success of our partnership with Lombard Odier IM which has added to ETF Securities’ ability to develop innovative investment solutions across European markets."
|Fund name||ISIN||TER (p.a.)|
|ETFS Lombard Odier IM Euro Corporate Bond Fundamental GO UCITS ETF||IE00BSVYHT42||0.30%|
|ETFS Lombard Odier IM Global Corporate Bond Fundamental GO UCITS ETF||IE00BSVYHV63||0.35%|
|ETFS Lombard Odier IM Global Government Bond Fundamental GO UCITS ETF||IE00BSVYHQ11||0.25%|
|ETFS Lombard Odier IM Emerging Market Local Government Bond Fundamental GO UCITS ETF||IE00BSVYHP04||0.55%|
Currency hedged versions of each product will be available across CHF, EUR, GBP share classes later this year
Notes to Editors
For further information, please contact:
Melanie Svalander, Communications, ETF Securities
Tel: +44 (0) 20 3440 8351; firstname.lastname@example.org
Warren Giles, Media Relations, Lombard Odier Investment Managers
Tel.: +41 (22) 709 31 57; email@example.com
Or visit www. http://www.etfsloim.com/
About ETF Securities - The Intelligent Alternative
The ETF Securities Group is one of the world’s leading innovators of Exchange Traded Products (ETPs) and provides specialist investment solutions to investors around the world, enabling them to intelligently build and diversify their portfolios.
We are pioneers in specialist investments, having developed the world’s first gold exchange traded product. Today we offer one of the most innovative ranges of specialist ETPs covering commodities, FX, equities and fixed income. Using that pioneering spirit, our unrivalled expertise and by working with best-in-class third parties, we seek out the most interesting investment opportunities and make them accessible to investors as the intelligent alternative.
For further information, please visit: www.etfsecurities.com
About Lombard Odier Investment Managers
Lombard Odier IM’s Geneva-headquartered business managed $49 billion on behalf of clients at the end of December 2014. Lombard Odier IM seeks to deliver performance by identifying sources of risk and return through multi-asset, absolute return, smart beta and high conviction strategies. Lombard Odier IM’s offers a range of solutions including risk-based asset allocation, thematic equity investments, convertible bonds, absolute return as well as single-manager hedge funds.
Issued by Lombard Odier Asset Management (Switzerland) SA authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA). Lombard Odier Investment Managers (“LOIM”) is a trade name.
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