Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a703690
New ETF targets short-duration peripheral eurozone bonds
by Robert St George on Sep 18, 2013 at 07:47
Deutsche Asset & Wealth Management has launched an exchange traded fund (ETF) that will track shorter-dated sovereign bonds issued by the eurozone’s five highest-yielding members.
At present, that basket comprises debt from Italy, Spain, Belgium, Ireland and Slovakia. The weighting for each country is based on the total market value of its issued bonds, so Italy accounts for 53% of the fund and Spain a third.
‘Our shorter-duration eurozone sovereign bond ETF will be welcomed by those clients looking for a reasonable yield while guarding against potential higher interest rates,’ said Simon Klein, Deutsche Asset & Wealth Management’s head of exchange-traded product sales for EMEA and Asia.
The underlying index has a yield to maturity of 1.92%, a duration of 1.84 years, and 89% of it is in BBB-rated paper. Prior to formally listing, the ETF had gathered more than £130 million in assets under management.
The product, to list on the Deutsche Börse with name db x-trackers II iBoxx Sovereigns Eurozone Yield Plus 1-3 UCITS ETF and the ticker XYP1, has a total expense ratio of 0.15% and is denominated in euros.
In addition to that ETF, x-trackers has also unveiled new vehicles that will track just Spanish or Italian sovereign debt, and one that will afford exposure solely to the Canadian dollar.
‘Providing investors with exposure to areas of the fixed-income market that may be more difficult to access via easy-to-trade products is a key development aim for us,’ commented Arne Noack, EMEA head of product development for exchange-traded products.