Paris-headquartered asset manager Lyxor has launched the Lyxor $ Floating Rate Note Ucits ETF with the aim of providing hedge from rising interest rates in the US to bond investors.
The ETF provides exposure to USD denominated corporate bonds that increase their coupon as the 3 month Libor rate rises in a way that if a Fed rate hike occurs, the yield is protected.
The index tracked by Lyxor’s ETF only invests in investment grade bonds with at least 2 years to maturity, and $500m outstanding. Bonds issued more than two years ago, or from emerging market companies are excluded from the index universe.
Lyxor has a total expense ratio of 0.15%.
Francois Millet, head of Product Line Management – ETFs & Indexing at Lyxor said: “For us it was important to create a simple, low cost way for investors to access the USD denominated FRN market. As a Luxembourg SICAV, this ETF will be attractive to investors right across Europe”.
Lyxor also plans to launch a euro hedged version of the ETF shortly.
Over €13.5bn of assets are being managed under Lyxor’s fixed income ETF range.