Amundi ETF has added to its corporate bond offering by launching a currency hedged USD/EUR share class to its USD-denominated Floating Rate Notes ETF.
The new ETF is exposed to the Markit iBoxx USD Liquid FRN Investment Grade Corporates 100 index. It is offered with ongoing charges of 0.20 per cent. The index gives 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.
The firm writes that the launch of this new currency-hedged share class, responds to increasing investor appetite for exposure combining a hedge against both a potential interest rate hike and currency volatility, while offering potentially better performance.
In an environment of low interest rates and expectations of rate hikes, Floating Rate Notes can allow investors to lower their exposure to interest rate moves. FRNs have a low degree of price sensitivity to interest rates as their coupons follow interest rates trends. Amundi ETF was the first ETF provider in Europe to offer exposure to EUR-denominated Floating Rate Notes in 2014 and to offer a USD declination in May 2015.
Fannie Wurtz, Managing Director of Amundi ETF, Indexing & Smart Beta, says: “Amundi has been developing a full range of fixed income ETF exposures to support investors in all market conditions. This new investment tool meets investors’ needs to capture potential yield4 in USD denominated floating rate notes, while at the same time limiting the impact of USD/EUR exchange rate volatility.”
