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Lyxor Asset Management – Most Innovative European ETF Provider


2016 was a strong year for Lyxor ETF, according to Adam Laird (pictured), Head of ETF Strategy, Northern Europe. The firm's assets under management grew by more than EUR3 billion over the course of the year. 

He explains that 2016 was a year of consolidation for the firm. "We've done a lot of analysing our product list and we've made changes we think will benefit our investors," he says.

Fixed income is an important part of the firm's strategy. They launched their first fixed income ETF in 2003 and now manage more than USD12.4 billion in bond ETFs, which makes Lyxor Europe's second largest issuer for fixed income. "One of the most important is reviewing our bond range cutting our charges on our gilt and government bond funds which are now from 0.07 per cent and we have launched some new investments in a number of different areas."

New products include Lyxor's inflation expectations ETFs. "We know that for many investors inflation is a major risk and the complexity is that inflation often comes with interest rate hikes which will knock the value of bonds," Laird says. 

"Our inflation expectations ETFs are a way for investors to get exposure to rising inflation expectations but hedged against interest rate hikes."

These products come in US dollars and a pan-European version. The US dollar version has raised over USD500 million in assets in less than a year. 

Another area where Lyxor has seen expansion over 2016 was in the commodities sector. "We've had commodity ETFs for a number of years but we recently launched a product that excludes agriculture from it for two reasons," Laird explains.

"Firstly, agriculture tends to be a volatile element in commodity investing and secondly we know many people don't like investing in agriculture for ethical reasons as they see it as profiting from hunger and speculating on food prices."

The new ETF covers the remainder of the commodities universe and it is essentially an Environmental, Social and Governance (ESG) ETF. "We have had other ESG equity investments but ESG is such a big theme at the moment, with so much demand, this is a way for investors to diversify their exposure," Laird says.

Lyxor already has a strong audience in institutions and finds that demand is filtering down in Europe to wealth managers and IFAs.

"We knew that in Europe fund managers and institutions were some of the first users of ETFs," Laird says.

"We have a strong presence amongst institutions, where we have a very loyal client base but now there is more and more growth from discretionary and wealth managers."

Looking into 2017, Lyxor believes this could be a big year for ETF investors. "We are seeing a change in investors' behaviour. The political and economic situation means investors need to be more selective with their bonds, and there is a good reason to be topping up core equity positions" says Laird.

"This is a natural time to use ETFs, to be targeted when investing in a low cost manner. For Lyxor, the year has started with a bang and we see no signs of it stopping."

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