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Lyxor switches EUR and USD ETF corporate credit ETFs to physical replication


Lyxor Asset Management has switched its EUR and USD investment grade corporate credit ETF range to physical replication.

The company has also cut its fees from 0.20 per cent to 0.14 per cent – which it says are the lowest available in the market. These moves reaffirm Lyxor’s commitment to strengthening the ESG aspects of its range in order to meet the growth in demand for sustainable fixed income investments.

Three corporate credit ETFs – the Lyxor ESG Euro Corporate Bond (DR), Lyxor ESG USD Corporate Bond (DR) and Lyxor ESG Euro Corporate Bond Ex Financials (DR) UCITS ETFs – were switched in November and December last year. None will use securities lending. Lyxor expects to make similar changes to other parts of its credit range in 2021.

These credit ETFs track the Bloomberg Barclays MSCI SRI Sustainable indices, an industry reference in the fixed income ESG field. These indices use a best-in-class ESG methodology including issuers with an MSCI ESG rating of BBB and above and excluding those which generate 5 per cent or more of their revenues from business activities related to thermal coal, unconventional oil and gas, arctic gas and arctic oil (among other exclusions).

These changes mean Lyxor now offers investors a range of cost-effective ESG credit ETFs which combine ESG investment principles with a specific focus on promoting the transition to a low carbon economy. 

Demand for sustainable assets is rising inexorably, with ESG ETF flows representing more than half of total cumulative ETFs flows in 2020, of which fixed income ETFs captured EUR9.2 billion in new assets over the year – more than double the assets raised during the whole of 20192.

Philippe Baché, Head of Fixed Income ETFs at Lyxor Asset Management, says: “Investors are increasingly looking for simple, transparent and competitive fixed income exposures which integrate ESG considerations. The changes we’re making to our credit ETFs, now and in the future, allied to our world-leading green bond ETF, are designed to help them build more sustainable fixed income portfolios capable of accelerating the transition to a low carbon economy.”


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