Paris-headquartered investment manager Lyxor has listed the Lyxor UK£ 10Y Inflation Expectations Ucits ETF on the London Stock Exchange.
The ETF aims to provide exposure to UK inflation expectations wih an index designed to rise or fall with the market’s expected inflation rate, and hedge against interest rate changes.
Lyxor’s inflation expectations ETFs seek to capture the market’s expectations for inflation through a long portfolio of inflation linked bonds and a short portfolio of nominal bonds, leaving investors exposed to changing inflation expectations, and reducing the risk of rising interest rates.
Adam Laird, head of ETF Strategy Northern Europe at Lyxor ETF, said: “This ETF addresses a growing problem: RPI was at 2.6% in January, its highest level in a two and a half years and investors need protection.
“But when prices rise interest rates usually follow, which can hurt bond investors. Inflation expectations ETFs are a way to get the protection, but lessen the sting of a central bank rate hike.”
As of end-November 2016, Lyxor advised and managed assets of €116.4bn.