UBS Global Asset Management’s ETF business has grown in recent years to become Europe’s 4th largest ETF provider. Its ETF business has doubled over the last two years, climbing from GBP7.4bn at the start of 2013.
“Over the last year, we have seen our AuM in Europe grow from GBP10.6bn to GBP14.7bn,” confirms Andrew Walsh (pictured), Head of UBS ETF Sales, UK. “In January alone our ETFs attracted GBP1.46bn in inflows.”
UBS’s currency hedged ETFs continue to be successful. It offers an extensive range of products tracking MSCI indices such as EMU, Switzerland, UK, Japan and others. Hedged share classes are available across key currencies including GBP, CHF, USD and EUR. For each currency-hedged ETF UBS offers a plain vanilla (un-hedged) ETF.
Strong inflows have not been restricted to these hedged ETFs. UBS’s key plain vanilla ETFs have also had strong inflows. “Our UBS MSCI EMU ETF now has EUR1.2bn in assets, while the GBP-hedged EMU product has GBP291m and the USD-hedged EMU product has grown to GBP583m,” confirms Walsh.
The ability for investors to build exposure to the eurozone, whilst at the same time leverage on a strengthening greenback, is something that sets UBS apart from other ETF providers. Walsh notes that whilst some investors believe in the underlying European equity market, they also recognise that the US economy is on a faster track to recovery.
“In many cases, investors are taking a positive view on Eurozone equities but simultaneously taking a view that the dollar will strengthen against the euro. Buying the EMU USD-hedged ETF effectively enables investors to play these two calls in a single product,” says Walsh.
The UBS MSCI UK ETF has grown from GBP444m at the end of 2014 to GBP712m in a little over six weeks. The product is available hedged to Swiss francs, the euro and the USD. Factor in that UBS also offers the UBS MSCI Switzerland ETF – again with the ability to hedge against sterling, euro and US dollar – and what UBS has done is create an entire suite of products for investors to customise their exposure to Europe with currency hedging.
“For our UBS MSCI EMU ETF hedged to USD, we were at GBP358m at the end of 2014. AUM is now GBP583m. Similarly, the sterling hedged EMU product has seen its AUM grow from GBP136m at year-end to GBP291m,” notes Walsh.
UBS has a passive investing track record that stretches back more than 30 years. “We are proud of that history, as we are of the quality of our passive fund management and the tight tracking difference delivered in our ETFs,” adds Walsh.
Investors need confidence that the ETF they buy does what it says on the tin. If the benchmark is up 10 per cent, so should the ETF (less the TER).
“We’re confident in the ability of our fund managers to efficiently manage our range of ETFs. Ultimately your tracking difference represents your true total cost of ownership. If you’re accessing esoteric exposure to areas such as emerging markets, it’s important to look at the track record of that product and see how successful it has been in tracking its benchmark,” says Walsh.
