Lyxor Asset Management, a subsidiary of Société Générale, is one of Europe’s leading providers of ETFs, with EUR30.2bn in total assets under management as of February 20. Lyxor currently has 240 ETFs available to sophisticated retail and professional investors covering equity, commodity and fixed-income indices and introduced 32 new ETFs in 2011, compared with 62 in 2010.
Lyxor ETFs are listed on a number of European stock exchanges including the London Stock Exchange. Their inherent transparency means investors can trade in and out of a given ETF on intraday pricing throughout normal market hours.
Within the fixed-income space Lyxor has one ETF focusing on cash, the Lyxor ETF Euro Cash (EONIA), launched in September 2007 and with AUM of EUR1.2bn at end-2011. Assets grew by 8.93 per cent in 2011, when the fund returned 0.7 per cent to investors.
Nizam Hamid (pictured), head of ETF strategy and deputy head of Lyxor ETFs, says clients used cash as a safe haven during the credit events of 2011: “For clients, it has been effective at delivering appropriate asset class exposure in a well-managed risk structure, while providing consistent returns.”
Hamid says Lyxor’s high level of transparency in its swap structure and commitment to providing detailed levels of fund information daily has been a key feature of the success not just in fixed income but of its entire ETF range.
“Our fixed-income ETFs offer low tracking error and low performance differentials versus the benchmark,” he says. “In 2012 we may add selectively to our fixed-income product range with a focus on areas where the swap-based structure can provide ease of access for clients.”
Within emerging markets, Lyxor currently has a suite of six ETFs giving investors exposure to countries and regions including Brazil, Kuwait, Eastern Europe and South Africa. Hamid says the emerging market equity ETFs have a strong investor following, particularly specific single country exposures “where more often than not we have the dominant ETF in terms of size of fund, exchange trading liquidity, tightness of spreads and low trading costs”. Lyxor’s biggest ETF in this space is currently the Lyxor ETF MSCI India with EUR1.15bn in AUM as of February 16.
The standout funds in terms of client use and trading volumes over the past year have been those focused on Russia, India and China. Says Hamid: “They have benefited from clients being attracted by the ease of trading and execution in large sizes in markets that can otherwise be difficult to trade in when accessing them locally.”
By offering a highly liquid, diverse range of emerging market ETFs, a range of regional benchmarks, a powerful mix of asset class choices and high levels of trading support, Lyxor is at the forefront of ETF providers in this increasingly popular market segment.
As for 2012, Hamid says Lyxor will concentrate on a handful of emerging market exposures: “Our main focus is likely to be on alternative weighted and risk-controlled indices, a trend that reflects a growing aspect of clients’ desire to manage portfolio risk.”
He adds: “Lyxor is delighted to have won these two awards, which reflect the commitment we’ve made to transparency, efficiency and liquidity as highlighted by the Lyxor ETF Charter.”
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