On Track Magazine: a variety of new indexing offers - and a small revolution

As the indexing landscape is changing with the accelerating evolution of themed benchmarks, what is state-of-the-art in 2019?

01 may 2019

In an increasing trend within boardroom engagements with their major stakeholders, pressure is growing for businesses to act and govern responsibly. The associated ESG and impact ETF products that are focused on this shift have also emerged from a niche area of indexing and have now entered the mainstream consciousness. S&P Dow Jones Indices has added a shade of green to the most royal of benchmarks with the launch of the S&P 500 ESG Index. UBS Asset Management is the first to offer an ETF based on that revolutionary use of an ESG overlay on a major index.

This edition additionally focuses on the fixed income space with two debt based UBS ETF products, the UBS ETFs Multilateral Development Banks (MDB) Bonds ETF and the HQLA ETF. Both products have their own story: The development agencies (such as the IBRD and Africa Development Bank) formed after WWII, are highly rated and generally offer a yield premium over US Sovereign bonds. The rationale for moving a portion of existing US Government debt portfolio allocations into MDB bonds is compelling. On the other hand, HQLAs (High Quality Liquid Assets) are ideal for investors active in liquidity or anticipating changeable market conditions. Those also involved in the managing of highly active portfolios now invest in an ETF that holds assets which banks must maintain as regulatory capital. The combination of Eurozone Treasury, government-related, covered and high grade corporate (non-financial) bonds makes the UBS ETF Bloomberg Barclays EUR High Quality Liquid Assets 1-5 Bond UCITS a vehicle to achieve an efficient change in portfolio risk positioning.

On Track finally touches upon tax optimization TTFs - Tax Transparent Funds that provide all the benefits of investing in a pooled fund.

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