Q: UBS TREASURY YIELD PLUS UCITS ETF

Opportunities : Potential for outperformance due to active management without taking on excessive credit or duration risk. The fund aims to generate additional yield through a rules-based systematic approach, selectively adding government-related and supranational issuers to capture additional yield. Maintains the portfolio’s overall risk profile aligned with the Bloomberg EUR and USD Treasury Indices, including duration, credit quality, and liquidity. Enhanced liquidity due to a stratified sampling approach combined with portfolio manager’s qualitative assessment. Benefits of an ETF structure: transparency, flexibility, tax efficiency, and lower costs. Optimized risk/return profile thanks to a broad diversification across a range of countries and sectors. The UCITS-compliant fund offers a high degree of transparency and cost efficiency. Risks : Investment in ETFs may be subject to additional risks compared to investing directly in the ETF's underlying securities, such as a potential lack of liquidity, which can result in greater volatility than its underlying securities. An ETF may trade at a premium or discount to its net asset value, or an ETF may not replicate exactly the performance of the benchmark index it seeks to track. Investing in an ETF may be more costly than if a portfolio owned the underlying securities directly. All investments are subject to market fluctuations. Every investment has specific risks, which can significantly incease under unusual market conditions. Changes in currency exchange rates may have an impact on fund value.CLOs have average lives that are typically shorter than the stated maturity. Tranches can be called early after the non-call period has lapsed.

Question 1

UBS EUR AAA CLO UCITS ETF

Accepted Answer

Opportunities:

Access to a complex asset class where UBS has deep expertise and a strong market presence through a cost-efficient ETF structure.
Potential for outperformance due to active management.
Benefits of an ETF structure: transparency, flexibility, tax efficiency, and lower costs.
Varied risk and return: The tranched structure of CLOs allows investors to buy in their preferred risk and return level.
Diversification: CLO investors are given a proportional exposure to the entire underlying portfolio, which might consist of 150-500 borrowers in a fully ramped CLO.
Floating rate and match funding: CLOs benefit from match funding, meaning that both their assets and liabilities are predominantly floating rate instruments. The floating rates may make investors relatively less sensitive to interest rate fluctuations with low interest rate duration.

Risks:

Investment in ETFs may be subject to additional risks compared to investing directly in the ETF's underlying securities, such as a potential lack of liquidity, which can result in greater volatility than its underlying securities.
An ETF may trade at a premium or discount to its net asset value, or an ETF may not replicate exactly the performance of the benchmark index it seeks to track.
Investing in an ETF may be more costly than if a portfolio owned the underlying securities directly.
All investments are subject to market fluctuations. Every investment has specific risks, which can significantly increase under unusual market conditions.
The structure and guidelines of CLOs can vary deal to deal, so factors such as leverage, portfolio testing, callability, and subordination can all influence risks associated with a particular deal.
Third-party risk is counterparties involved: the manager, trustees, custodians, lawyers, accountants and rating agencies.
There may be limited liquidity in the secondary market.
CLOs have average lives that are typically shorter than the stated maturity. Tranches can be called early after the non-call period has lapsed.

Question 2

UBS TREASURY YIELD PLUS UCITS ETF

Accepted Answer

Opportunities:

Potential for outperformance due to active management without taking on excessive credit or duration risk.
The fund aims to generate additional yield through a rules-based systematic approach, selectively adding government-related and supranational issuers to capture additional yield.
Maintains the portfolio’s overall risk profile aligned with the Bloomberg EUR and USD Treasury Indices, including duration, credit quality, and liquidity.
Enhanced liquidity due to a stratified sampling approach combined with portfolio manager’s qualitative assessment.
Benefits of an ETF structure: transparency, flexibility, tax efficiency, and lower costs.
Optimized risk/return profile thanks to a broad diversification across a range of countries and sectors.
The UCITS-compliant fund offers a high degree of transparency and cost efficiency.

Risks:

Investment in ETFs may be subject to additional risks compared to investing directly in the ETF's underlying securities, such as a potential lack of liquidity, which can result in greater volatility than its underlying securities.
An ETF may trade at a premium or discount to its net asset value, or an ETF may not replicate exactly the performance of the benchmark index it seeks to track.
Investing in an ETF may be more costly than if a portfolio owned the underlying securities directly.
All investments are subject to market fluctuations. Every investment has specific risks, which can significantly incease under unusual market conditions.
Changes in currency exchange rates may have an impact on fund value.CLOs have average lives that are typically shorter than the stated maturity. Tranches can be called early after the non-call period has lapsed.

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