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GBP-hedged distributing ETF from Pimco and Source


Global investment management firm, PIMCO, and ETF provider, Source, have launched a GBP-hedged version of the PIMCO Short-Term High Yield Corporate Bond Index Source UCITS ETF.

With over USD1.2 billion of assets under management, the ETF is designed to provide investors with a comparable yield to the broad US high yield index, while the hedging facility will remove the US dollar currency exposure. The ETF will distribute income to investors on a monthly basis.
Mike Trovato (pictured), Head of Product Management at PIMCO Europe, says: “Investors who want to enhance the yield in their portfolio may wish to consider the short-term high yield segment, as it offers a similar level of yield as the broader high yield market. In addition, with the probability of tightening by the US Federal Reserve, it may also be worth focusing on bonds with shorter maturities, as it reduces the portfolio’s sensitivity to rising interest rates. This ETF combines both of these elements.”
James Polisson, Chief Marketing Officer of Source, says: “This new share class responds to investor demand we have seen on two fronts.  First, it meets the needs of those investors in the UK interested in investing in the underlying US high-yield bond market, but who prefer to not have any currency exposure outside of Sterling. Secondly, it meets the needs of income-seeking investors wanting not only higher yields but also more frequent distributions.”    
The PIMCO Short-Term High Yield Corporate Bond Index Source UCITS ETF – GBP-Hedged is a 'smart passive' solution and uses a risk factor-based approach to optimise the replication of the Bank of America Merrill Lynch US High Yield 0-5 Year Index. To minimise the impact of exchange rate fluctuations between the USD and GBP, the GBP-Hedged share class enters into currency forward contracts. The ETF will be listed on the London Stock Exchange.

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