UBS Adds Eight GBP-Hedged ETFs to its Alternative Beta Offering

UBS ETFs now offers GBP-hedged exposure to low volatility, value, quality and yield factor tilts in both USA and Eurozone equities.

UBS Asset Management has today listed eight alternative beta (aka 'smart beta' or 'factor') ETFs with built-in currency-hedging on the London Stock Exchange. With these new investment solutions, investors can gain exposure to factor strategies on the US and Eurozone equity markets whilst also benefiting from the ability to hedge currency risk in British pounds. These GBP-hedged share classes add to the existing suite of alternative beta ETFs listed by UBS Asset Management in September 2015. UBS now offers the broadest range of currency-hedged alternative beta ETFs.

The products, which were developed in conjunction with index provider MSCI, uses the concept of factor premiums developed by academics over several decades. This investment approach is based on the realisation that certain market factors systematically contribute to excess returns vs. standard market cap weighted indices.

Currency fluctuations can have a major impact on investment returns with more proactive global monetary policy exacerbating currency volatility in recent years. From September 2010 to September 2015 a French or German investor in the MSCI European Monetary Union ('EMU') index would have enjoyed an annual return of +6.38% while an unhedged GBP investor in the same index would have seen annual returns of just +3.45%. Had the MSCI EMU GBP hedged exposure been chosen, the annual return for the UK investor would have been almost identical to the 6.38% experienced by the local European investor.

It is becoming increasingly evident that ‘Alternative Beta’ or ‘Factor’ investing is growing in interest amongst clients and is starting to be considered as a core part of portfolios. In light of UBS's experience and success in building and delivering currency-hedged ETF solutions, it was a logical step to expand this into our existing Alternative Beta offering. This will enable investors here in the UK to access specific targeted factor risk-premia in the US and Eurozone equity markets whilst managing currency risk.

All eight UBS ETFs track their respective benchmarks through full physical replication. All of the below listed ETFs are UCITS IV compliant, have applied for UK Reporting status and are suitable for SIPPs and ISAs.