Partner with one of the world’s fastest growing ETF managers with the expertise to deliver a wide range of solutions to meet your needs, and experience earned from over 30 years of excellence.
In just one transaction, investors can access numerous markets through our broad selection of ETFs across equity, fixed income, commodity, precious metal, and real estate asset classes.
You can benefit from our status as one of the most experienced European ETF providers. We offer high quality index replication strategies, supported by a seasoned and skilled portfolio management team.
Our ranking as Passive Manager of the Year 2021 at the Insurance Asset Risk EMEA Awards was the latest in a stream of awards for our ETF capabilities over recent years.
Access the major equity markets in a single transaction with our wide range of UBS Equity ETFs.
Invest in liquid and well-diversified fixed income market segments such as corporates, sovereign or Emerging Markets debt.
Our sustainable journey started in 2011 with the launch of our first four SRI ETFs. As a pioneer in this space, we offer a wide range of solutions to help you meet your ESG objectives.
You can use our extensive range of currency-hedged UBS ETFs to help hedge your portfolio against exchange rate fluctuations.
Diversify your portfolio with our cost-effective and liquid commodity focused ETFs.
Focus on systematic factor indices to track markets in a more sophisticated way than following market capitalization alone, while striving for diversification benefits.
Reduce your carbon exposure and drive your portfolio to a net-zero future with our cost-effective, rules-based MSCI Climate Paris-Aligned and Climate Aware ETF solutions.
UBS ETF Capital Markets
The ETF Capital Markets team assists clients on their journey of understanding ETF trading and that competition is key to best execution. A poor ETF execution can be costly and negate the benefits of the ETF wrapper in terms of transparency, liquidity and certainty of execution.
The UBS ETFs team seeks to remain at the cutting edge and to remain pro-active in bringing new passive solutions that fit the wide variety of modern investor preferences.
Explore common questions
An exchange traded fund (ETF) is an investment fund that tracks the performance of its underlying index and can be bought and sold on the stock exchange. Like a traditional fund, an ETF is a mutual fund and thus unaffected by any insolvency of the ETF provider. It allows the benefits of a collective investment fund yet trades like a share.
ETF trading can be done on the stock exchange or over the counter at any time of the day. As ETFs are pegged to an underlying index, they are passive investment vehicles that merely replicate the performance of their underlying asset. In other words, when the underlying index increases in value, the value of the ETF increases likewise.
The first ETFs were listed in the US in 1993 and Europe from 1999. Since then, a steadily increasing number have become available. Traditionally, ETFs are passive index funds but actively managed ETFs have also come into play since their authorization in 2008 and require a portfolio management strategy.
UBS ETFs are available on a wide range of underlying asset classes such as equities, bonds, commodities, precious metals and real estate and offer investors access to numerous markets with just one transaction. Investors can also choose the replication method they prefer as UBS offers a wide spectrum of physically and synthetically replicated ETFs.
ETFs provide you with the opportunity to diversify your portfolio in a very inexpensive and efficient manner by distributing risk across multiple risk carriers, allowing you to optimize the risk profile of your investment. Because ETFs track an index, you can cover an entire market with just a single transaction.
ETFs are easy to buy and sell - including on an intraday basis. Investors are able to act on market views within seconds. Due to these characteristics, ETFs can be used as part of an investment strategy in a variety of ways: for long-term growth, for short-term trading opportunities and for hedging part of a portfolio.
ETFs are particularly transparent investment instruments because they match the performance of the underlying index, net of fees. All key trading and other information can be viewed on an intraday basis or in real time. UBS ETFs calculate the indicative net asset value every 15 seconds during normal trading hours.
ETFs do not incur any issue or redemption surcharges - just the transaction costs of buying and selling an ETF. Moreover, only a minimal management fee is charged.
Like traditional funds, ETFs are mutual funds. They are unaffected by any insolvency of the ETF provider or custodian bank as the fund's assets are not included in the bankruptcy estate.
The objective of an exchange traded fund (ETF) is to track as closely as possible the index on which the ETF is based in order to provide investors in the ETF the same performance relative to the market underlying the index.
Indices are based on theoretical calculations, however, which means that costs incurred in practice, for example, for the purchase or sale of securities represented in the index are not reflected in the index calculation. Nevertheless, these costs are charged whenever an index and its performance are replicated for an investment.
How closely an ETF tracks the performance of its underlying index is therefore critical. Ideally, the performance of the ETF differs from that of the index solely in the costs and fees incurred. Since for example indices tracking only the stock market of a single country apply different criteria for index replication compared to an index containing stocks from multiple countries, the criteria for an exact index replication differ from index to index. For these reasons, UBS ETFs utilize a variety of index replication methods.
Full physical replication
The ETF invests in the securities represented in the index in accordance with their index weighting.
Optimized physical replication
The ETF invests only in those securities represented in the index that are needed to achieve a performance very close to that of the index.
The ETF invests in a securities portfolio and exchanges its performance for that of the index.
The purchasing process is in principle identical for all replication methods - however, physical delivery of the securities applies only to physically replicated ETFs.
- The investor purchases ETF units on the stock exchange or directly from a market maker or authorized partner (OTC trading)
- The market maker or authorized partner either pays cash (for physically and synthetically replicated ETFs) or delivers the requisite securities (only for physically replicated ETFs) to the ETF
In the case of full physical index replication, the ETF acquires all securities represented in the underlying index in accordance with their index weightings. Hence, the ETF is in physical possession of the index components and thus an exact replica of the index. If any changes are made to the index, for example through index adjustments or capital actions of the represented securities, the ETF replicates these changes, making transactions necessary on a regular basis. The ETF regularly distributes income, in the form of dividends or coupons for example.
The full physical replication method is characterized by simplicity and minimal tracking error.
- The ETF is in physical possession of all securities represented in the index in accordance with their index weighting
- All index adjustments and capital actions are identically replicated
- Some ETFs lend out securities from their portfolio for a fee
A number of select physically replicated ETFs engage in securities lending in order to generate additional returns and reduce investors' net costs, whereby the ETF's securities are lent out for a fee. Securities lending transactions of UBS ETFs are overcollateralized to a minimum of 105%.
In the case of optimized physical replication, the ETF holds a sample of the securities in the underlying index. Analytical tools and mathematical optimization procedures are implemented to define a subset of the index constituents that will achieve a return similar to that of the original stocks represented in the index. The optimized physical replication method can be utilized to increase liquidity and minimize tracking error.
The optimized physical replication method is particularly suitable for very broad-based indices. For example, the MSCI World Index comprises approximately 1,600 stocks from a variety of markets, jurisdictions and currency zones. Accordingly, full physical replication of the index would involve high transaction costs. A number of these securities are not very liquid or have only minimal impact on the performance of the Index due to their low weighting. Transaction costs can be reduced by excluding these securities.
- The ETF is in physical possession of a subset of the index components, which is used either for very broad-based indices or for indices with illiquid securities
- Optimization procedures are implemented in order to lower transaction costs, increase liquidity and minimize tracking error
- Some ETFs lend out securities from their portfolio for a fee
Several factors contribute to pricing ETFs and affect individual ETF costs. The total cost of owning an ETF depends largely on your chosen portfolio strategy as well as the asset class the fund invests in. ETF fees are lower than traditional mutual funds however they do have a wide variety of different pricing terms. ETF spreads also vary in relation to ETF activity.
The tracking difference is the difference between fund performance and index performance. The fund performance represents all costs relevant to the fund and all income flows into the fund. Both the ETF total expense ratio and the tracking difference are published in the fund's semi-annual and annual report.
The total expense ratio is the ratio between total costs and the average fund size during a fiscal year. Costs are defined as all expenses in the income statement, including management, administration, custody, auditing, legal and advisory fees (operating expenses). The ETF total expense ratio is expressed retroactively as a percentage of the average fund assets and is calculated in accordance with the guidelines on the calculation and disclosure of the TER of collective investment schemes.
In the case of synthetic index replication, the performance of the index underlying the ETF is achieved through a swap. The ETF enters into a swap agreement with an investment bank, the swap counterparty. The content of this agreement is the transfer of the ETF's cash flows to the swap counterparty, which in return guarantees the performance of the tracked index to the ETF. The risk associated with precise index tracking is transferred from the ETF to the swap counterparty. As physical ownership of the securities represented in the index is no longer a prerequisite for participation in the index performance, it is possible to efficiently track markets that for example are impossible or difficult to access due to trading restrictions.
UBS employs two different swap structures in synthetic replication: the fully funded swap and a combined model (fully funded swap / total return swap and asset portfolio).
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