Amundi has launched the Amundi ETF Floating Rate USD Corporate UCITs ETF, the first European exchange traded fund providing exposure to the Markit iBoxx USD Liquid FRN Investment Grade Corporates 100 index (total return).
The ETF is now listed on Euronext Paris and is already FCA recognised. It will be cross-listed soon on the main European markets.
The Markit iBoxx USD Liquid FRN Investment Grade Corporates 100 index gives representative exposure to the USD denominated investment grade Floating Rate Notes (FRN) market via holdings of between 40 and 100 highly liquid USD denominated FRNs issued by corporates from developed countries. Its methodology includes liquidity screening, taking into account trading volumes and number of trades, with the aim of selecting the most liquid bonds. The index is rebalanced monthly and no issuer can have a weighting of more than 5 per cent.
With interest rates at historic lows, Floating Rate Notes aim to insulate portfolios from interest rate moves. As the coupon changes in line with interest rates, these products have a low degree of price sensitivity to interest rates and a yield which moves in line with interest rates.
In September 2014 Amundi launched on Euronext Paris the first ETF in Europe based on European Floating Rate Notes. Today’s new ETF exposed to US corporate bonds, with a TER 3 of 0.18%, demonstrates Amundi’s determination to offer investors a complete toolbox of investment solutions.
Valerie Baudson, Global Head of ETF, Indexing and Smart Beta at Amundi, says: “Our innovative Floating Rate Notes range is of particular interest in today’s market for investors seeking a source of yield4 in a low rate environment and a hedge in the event of a rise in EUR and US short term rates. Our building blocks are innovation, cost-efficiency and quality of replication.”
