Lyxor Asset Management (Lyxor) is to complete the switch of its Government Bond ETF range to the direct replication model known as “physical” replication.
As at 30 November 2014, these ETFs account for GBP421 million under management, and their transition will bring total assets managed as physical replication ETFs to GBP7.1 billion.
These funds will be managed as purely physical replication ETFs, without the use of sampling techniques, in order to produce the highest possible correlation with the index performance. The management process will exclude any securities lending transactions which do not generate enough additional return for investors to justify the associated counterparty risk.
Lyxor would like to emphasise that whatever the replication model used to track the index, all its ETFs must meet the strictest quality benchmarks in terms of transparency, efficiency and liquidity.
Arnaud Llinas, global head of ETFs and indexing at Lyxor, says: “Our strategy is to offer our clients the most efficient ETFs by selecting the most appropriate replication method for each index. We consider our bond index product offering to be much improved by this method of direct replication.”
In basing its strategy on the performance and quality of its funds, Lyxor ETF has experienced AuM growth of 25% over the last two years, reaching GBP30.5 billion*, making Lyxor the number three ETF provider in Europe, and number six globally.
The funds passported in the UK being transitioned to physical replication are:
LYXOR UCITS ETF EUROMTS INFLATION LINKED INVESTMENT GRADE
LYXOR UCITS ETF IBOXX $ TREASURIES 1-3Y
LYXOR UCITS ETF IBOXX $ TREASURIES 10Y+
LYXOR UCITS ETF IBOXX $ TREASURIES 5-7Y
LYXOR UCITS ETF IBOXX £ GILTS
LYXOR UCITS ETF IBOXX £ GILT INFLATION-LINKED
LYXOR UCITS ETF BONO 10Y – MTS SPAIN GOVERNMENT BOND – C-EUR
LYXOR UCITS ETF MTS 1-3y SPAIN GOVERNMENT BOND – C-EUR
LYXOR UCITS ETF BTP 10Y – MTS ITALY GOVERNMENT BOND – C-EUR