UBS Asset Management (UBS AM) announces the launch of three new Ireland-domiciled UCITS ETFs.
The passively managed ETFs cover the major currencies and hence offer the following overnight rate exposures:
The UBS EUR Overnight Rate SF UCITS ETF tracks the Solactive €STR Daily Total Return Index, reflecting the performance of the Euro Short-Term Rate (€STR) through daily compounding.
The UBS USD Overnight Rate SF UCITS ETF tracks the Solactive SOFR Daily Total Return Index, reflecting the performance of the Secured Overnight Financing Rate (SOFR) through daily compounding.
The UBS GBP Overnight Rate SF UCITS ETF tracks the Solactive SONIA Daily Total Return Index, reflecting the performance of the Sterling Overnight Index Average (SONIA) through daily compounding.
The firm writes that as rates have peaked, there still remains uncertainty over the timing, speed and extent of future rate cuts. While all investments are subject to market fluctuations, the overnight space aims to provide investors with reduced interest rate risk while at the same time providing higher yield opportunities than for traditional bank deposits.
The overnight rate ETFs synthetically replicate the performance of the index: the fund holds a portfolio of equities and matches the performance of the respective overnight indices through its swap-based structure. This currently enables the ETFs to deliver the performance of the overnight rates plus a positive spread.
Clemens Reuter, Head ETF & Index Fund Client Coverage, UBS AM says: “We are delighted to offer our clients our first UCITS ETFs with overnight rate exposure, where investors can efficiently access short-term cash and liquidity management tools.”
The funds will be listed on SIX, Xetra, Borsa Italiana and the London Stock Exchange; they are registered for sale in Austria, Switzerland, Germany, Denmark, Spain, Finland, France, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, Sweden, and the UK.
