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UBS launches sterling-hedged ETFs to mitigate currency risk


UBS Global Asset Management has listed eight new GBP hedged exchange-traded funds on the London Stock Exchange.

The products, available in distributing and accumulating share classes, track the MSCI Japan, Canada, EMU and Switzerland.
The GBP hedged ETFs on the MSCI Canada, EMU and Switzerland are the first of their kind to be listed on the LSE. The Japan ETF has the lowest TER in its class. This new range of ETFs is complemented through additional listings of un-hedged share classes on various MSCI indices.
Recent developments in currency markets, as well as extensive central bank intervention in international markets, continue to challenge investors who are seeking to manage their currency exposure. In order to manage the risk of exchange rate fluctuations, UBS Global Asset Management is offering physically-replicated currency-hedged ETFs on major equity indices for the first time.
With the UBS ETF MSCI Canada GBP hedged UCITS ETF, Sterling investors can hedge against exchange rate fluctuations of the Canadian Dollar and thus can participate far more accurately in the underlying performance of the MSCI Canada. Transparent currency-hedging strategies can have a material impact on the performance of portfolios with international exposure.
Andrew Walsh, head of UBS ETF sales UK, says: "These currency-hedged UBS ETFs are ideal building blocks for investors looking to minimise their currency risks. In this way, we are responding to a growing need of investors who would like to better hedge their portfolios against exchange rate fluctuations. For instance, investors can gain access to Japanese equities without having to worry about exchange rate fluctuations between the British Pound and the Japanese Yen."
The new ETFs are UCITS compliant, physically replicated, and domiciled in Luxembourg. The funds will apply for UK reporting fund status and perform annual reporting for UK investors.
In addition, UBS ETFs is listing a distributing and an accumulating share class on the MSCI United Kingdom as well as ETFs on the MSCI EMU with a trading currency in Euros and on the MSCI Emerging Markets, MSCI Japan, and MSCI World all of which are traded in US Dollars.
Peter Sleep, senior portfolio manager at Seven Investment Management (7IM), says: “The new Japan GBP-hedged ETF from UBS is a valuable, low cost, addition to the investments available to ordinary investors who wish to invest in Japan without the risk of currency volatility.” 

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