UBS ETF Please confirm you are resident in Italy to proceed.

In addition to the usual risks referring to market fluctuations, securities and index type, the investor has to be aware that the funds detailed in this document are also exposed to other risks, such as: secondary market negotiations, differences between NAV and market prices, calculation changes, differences in publications of the index on behalf of the index provider, risks connected to the listing of the index components on different markets, risks connected to the use of derivatives.

There are also further risks these funds that replicate equity or bond indexes are exposed to. The investor is therefore required to have an adequate tolerance and capacity to bear such risks.

For a complete analysis of all the risks described we recommend to read carefully the prospectus.

Corporate bond investing Access to a well-diversified selection of liquid corporate bonds

Fixed income

With the family of UBS ETFs, it is easy to access the corporate fixed income markets in the USA and Europe. The UBS corporate bond ETF tracks indices that reflect a well-diversified selection of bond issues which meet specific maturity and liquidity requirements. Credit quality is considered with a focused UBS investment grade bond ETF or high yield bond ETF.

Characteristics of UBS bond index funds

UBS bond index funds look at specific segments of the corporate-bond market with a regional focus or currency-specific bonds, specifically short-end or full maturity. Additionally, UBS bond ETF are available in a number of trading currencies as well as currency-hedged share classes. You can add the fixed income exposure the way you want, choosing the best bond ETF for your investment portfolio. 

The UBS corporate bond index funds provide investors with benchmark exposure to the most important corporate fixed income markets in USA and Europe.

With UBS corporate bond ETFs, investors can build their portfolios by adding regionally-orientated or currency-orientated fixed income investments. The corporate credit segment is an attractive addition to the equities and sovereign credit which typically sit in multi-asset portfolios. The investment objective of the these ETFs is to replicate the price and accrued interest performance of the corporate bonds indices.

Your benefits of investing in corporate bonds UBS ETFs at a glance:

  • Provide investors with benchmark exposure to the most important corporate fixed income markets in USA and Europe
  • Well diversified investments due of selected bond issues which meet specific maturity, credit quality and liquidity requirements
  • Exposure to high quality corporate issuers with investment-grade ratings
  • Modular regional structure and diversification through exposure to corporates operating in a variety of economic sectors
  • Local currency and currency hedged investments provide flexibility to match underlying fixed income exposure with funding currency, or to take a directional bet on currency movement
  • Physical index replication means no counterparty risk from swap transactions

Bonds are generally considered safer than equities because if an issuer defaults it must pay its bondholders before it pays its shareholders, but the level of risk depends on the type of bond. For example, holding corporate bonds will deliver higher returns than holding government bonds, but they associate with a greater risk reflecting an increased risk of payment due to a corporate default. In general, all bonds are subject to interest rate risk, liquidity risk, inflation risk, default risk, and rating downgrades.

Modern portfolios comprise of equity and fixed income investments, and possibly other assets like commodities, real estate or alternatives. In a multi-asset portfolio, fixed-income exposure has the potential to reduce the overall risk through high preservation of capital with a guaranteed income stream through regular projectable coupon payments. Figure 1 shows the long-term performance in net total returns of the broad fixed income market compared to the broad equity market dating back to 1973 for the US market.

test

Source: Barclays, Bloomberg. Past performance of investments is not necessarily a reliable indicator of future results.

Figure 1: Performance in net total returns (monthly data Jan 1973 – Jan 2015, USD) US Government 10 year yield (rhs)

The equity returns experienced more volatility and swings in performance, whilst fixed income investment (both corporate and sovereign) delivered lower return associated with substantially lower volatility. In recent years, corporate bonds outperformed safer treasuries resulting from the search for incremental yield pickup in liquid high quality corporate bonds for example.

Importantly, in the years when the equity market was experiencing severe drawdowns, the fixed income investment was typically offsetting losses by delivering positive return (or facing substantially lower losses than equity markets like in 2008) proving its importance for more balanced portfolios.

The historically good performance of fixed income investments can be associated with the decreasing inflationary pressure and lower interest rates, as seen in Figure 1. Of course, with interest rates going down, the price of the issued bond goes up, all else being equal, implying capital gains for the portfolio. In this example however, if the Federal Open Market Committee (responsible for US monetary policy) would seek to tighten monetary policy, there would be a downward price-correction on the issued bonds, offset by coupon income to a certain degree.

Bond ETFs track major fixed income indices by holding issues in the underlying universe as defined by index provider. Investible bond indices represent segments of the fixed income market, be it Treasury securities, corporate bonds, or municipal bonds, and may focus on a certain part of the yield curve (e.g. short duration).

In the corporate segment, the standard classification separates issuers rated with an investment grade from the non-investment grade. Another classification deals with the currency of the issued bond or risk domicile of the issuer. Table 2 summarizes major inclusion criteria of the corporate bond indices tracked with UBS ETFs.

Inclusion criteria

Barclays US Liquid Corporate 

Barclays Euro Area Liquid Corporate

Currency

Principal and coupon must be denominated in USD

Principal and coupon must be denominated in EUR

Domicile 

Issuer country of risk must be US

Issuer country of risk must be Eurozone member state

Eligible Issuer Type

Corporate 

Corporate 

Amount Outstanding

USD 1bn minimum par amount outstanding

EUR 500mn minimum par amount outstanding

Credit Quality

Securities must be rated investment grade 

Securities must be rated investment grade 

Terms of Maturity

At least one year until final maturity regardless of optionality (1+)
Remaining time to maturity of one to five years (1-5)

Remaining time to maturity of one to five years (1-5) 

Seasoning

Time since issuance (dated date) less than two years

Time since issuance (dated date) less than two years

Minimum Piece / Increment 

Minimum piece no greater than USD 50'000 / Minimum increment no greater than USD 1'000

Minimum piece no greater than EUR 100'000.

Coupon

Fixed-rate coupon; also callable 

Fixed-rate coupon; also callable 

Seniority of debt

Senior and subordinated issues are included

Senior and subordinated issues are included

Rebalancing 

Monthly

Monthly

Currency Hedged Indices

Available 

Available 

Inclusion criteria

Markit iBoxx EUR Liquid Corporates

SBI Foreign

Currency

Principal and coupon must be denominated in EUR

Principal and coupon must be denominated in CHF

Domicile 

All

All excl. Switzerland and Lichtenstein

Eligible Issuer Type

Corporate

Corporate, Sovereign and Supranational Agencies

Amount Outstanding

EUR 750mn minimum par amount outstanding

CHF 400mn minimum par amount outstanding

Credit Quality

Securities must be rated investment grade

Securities must be rated investment grade

Terms of Maturity

At least one year until final maturity regardless of optionality (1+)

Remaining time to maturity of one to five years (1-5)
Remaining time to maturity of five to ten years (5-10)

Seasoning

Time since issuance (dated date) less than three years

NA

Minimum Piece / Increment 

NA

NA

Coupon

Fixed-rate coupon; callable are excluded 

Fixed-rate coupon; also callable

Seniority of debt

Senior and subordinated issues are included

Senior and subordinated issues are included

Rebalancing 

Quarterly

Monthly

Currency Hedged Indices

NA

NA

Table 1: Index Inclusion Criteria

Given distinct inclusion criteria, investors have the possibility to pick their preferred exposure. For example, Barclays Euro Area Liquid Corporate 1-5 Years Index comprises of EUR-denominated bonds with maturities of between 1-5 years issued by Eurozone-domiciled corporates. By contrast, the Markit iBoxx EUR Liquid Corporates comprises of EUR-denominated bonds regardless of the issuer domicile or bond maturity.

Within the index, it is the terms of maturity which define sub-segments. For example, the SBI Foreign tracked indices have two maturity baskets, 1-5 years and 5-10 years that provide investors with flexibility to invest in the part of the yield curve within their interest rate risk requirement. Note, also that this index blends issuer types, i.e. corporates as well as (sub-) sovereigns.

Importantly, the inclusion criteria defining credit quality states that securities must be rated investment grade. Because the creditworthiness of an issuer is of major significance, index providers apply the ratings of the leading credit agencies Moody’s, S&P and Fitch to construct the composite (typically average or middle) ratings. In cases where explicit bond level ratings may not be available, other sources (e.g. local agencies, banks etc.) may be used to classify securities by credit quality.

Credit events associated with downgrades are continuously monitored at the bond level, and issues violating credit quality requirements can be removed from the universe.

Bonds are sold in the primary market directly from issuers and they can then be traded in the secondary market before their final maturity date. Qualifying securities issued in the primary market may be considered for inclusion in the benchmark index if required security reference information and pricing are readily available. However, the majority of bonds in the underlying index are traded on the secondary market, where liquidity is the key requirement for the physical replication of the index. Generally speaking, low liquidity negatively impacts the ETF Net Asset Value performance through higher trading and rebalancing costs.

In addition, if eligible bonds for the selected benchmark face low liquidity, they may not be included into the ETF holdings as a result of sampling, thus potentially leading to an increase in tracking error. At the macroeconomic level, higher liquidity is generally associated with good economic conditions thus implying lower default risk. Once economic conditions deteriorate - and default risk is perceived to be higher - liquidity issues may easily emerge. At the bond level, higher liquidity generally means that:

  • Bonds with higher credit ratings are usually more liquid than low quality credit.
  • Bonds with issuer risk domiciled in developed economies are usually more liquid than those of emerging economies.
  • Bonds "on the run" (i.e. following issuance) are usually more liquid than those issued in the distant past. 
  • Bonds with a simpler structure (standard fixed-rate coupon) are usually more liquid than bonds featuring additional complexities or clauses (e.g. sinkable, perpetual etc.)
  • Bonds denominated in major currencies (e.g. USD, EUR, CHF or GBP) are usually more liquid than bonds denominated in emerging-market currencies. 
  • Larger issue size usually helps to improve tradability on the secondary market.

The over the counter (OTC) nature of fixed income markets makes measuring liquidity risk considerably more challenging than in equity markets. For example, the liquidity of a ten-year bond is not the same as of six-months one even for the same issuer. One applicable liquidity measure is the Barclays' Liquidity Cost Scores (LCS) which is the cost – as a percent of the individual bond’s price – to execute a round‐trip transaction, i.e. the cost of immediately transforming the bond to cash, and vice versa. Individual scores can be aggregated up to the portfolio level; for example an LCS score of 1.5 would imply that an immediate round‐trip would currently cost 1.5% of the bond portfolio price. Figure 2 shows the LCS times series for four indices for illustrative purposes. It is clear that the most liquid index is the US Treasuries (LCS on right-hand-scale), showing that a round‐trip transaction would cost as little as 3 basis points (or 0.03%). By contrast, the US High Yield index is the least liquid one and in credit stressed times (e.g., beginning of 2009), the costs can turn as high as 7%. The UBS ETFs tracked indices meet the general requirements favouring liquidity, i.e. focus on investment grades, large issues "on the run" in developed markets and major currencies. As a result, the Barclays US Liquid Corporate Index experiences an average LCS of approx. 60 basis points (or 0.6%), as seen in Figure 2.

Source: Barclays POINT.

Figure 2: Liquidity Cost Score (in %)

Figure 2: Liquidity Cost Score (in %)
Figure 2: Liquidity Cost Score (in %)
Figure 2: Liquidity Cost Score (in %)

Empirical studies focusing on currency risk suggest that investors bearing currency risk are not compensated with systematically higher returns, meaning it is not economically rational to carry this risk. This results from the fact that currency movements are mean-reverting to their economic equilibriums over time thus having both positive and negative impacts in time.

Figure 3 shows an example of the monthly returns from the Barclays US Liquid Corporate 1-5 Year Index (price and coupon returns) in local currency (USD) and in Figure 4 when the investment is funded in CHF without a currency hedge in place.

Source: Barclays POINT. Past performance of investments is not necessarily a reliable indicator of future results.

Figure 3: Monthly returns on Barclays US Liquid Corporates 1-5 Year Index (index currency USD and funding currency USD)

Source: Barclays POINT. Past performance of investments is not necessarily a reliable indicator of future results.

Figure 4: Monthly returns on Barclays US Liquid Corporates 1-5 Year Index (index currency USD funding currency CHF)

Figure 3 highlights two aspects as we move along the time, i.e. smaller changes in bond prices and also smaller coupon returns. This is in line with the US monetary policy of cutting the reference interest rate over that period.

It is insightful, however, to compare price and coupon returns in USD currency (shown in Figure 3) to the case when the funding currency is CHF, shown in Figure 4 which includes the impacts of currency movements. The magnitude of currency returns - both positive and negative movements - is absolutely dominant. And while currency movements may create some opportunities, they are undoubtedly associated with additional volatility.

For investors seeking fixed income return, the unhedged currency exposure may appear as too risky yet with most of the risk being attributable to the fund vs. funding currency mismatch. To mitigate currency risk and budget the risk more properly, UBS ETFs tracking Barclays corporate bond indices offer currency hedged share classes which provide undiluted exposure to corporate fixed income investment. The currency hedged indices assume a monthly frequency of resetting the hedge contracts.

Corporate bond investment products in focus

Fundname ISIN Replication Fee Last NAV
Currency
Fact sheet

UBS ETF (LU) Bloomberg Barclays TIPS 1-10 UCITS ETF (USD) A-disLU1459801434

Physical

0.15%

12.401 USD

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates UCITS ETF (USD) A-accLU1048316720

Physical

0.18%

14.0148 USD

UBS ETF (LU) Bloomberg Barclays USD Emerging Markets Sovereign UCITS ETF (USD) A-disLU1324516050

Physical

0.42%

11.8346 USD

UBS ETF (LU) Bloomberg Barclays Euro Area Liquid Corporates UCITS ETF (EUR) A-disLU0721553864

Physical

0.18%

107.4603 EUR

Fund description

The UBS ETF – Bloomberg Barclays Euro Area Liquid Corporates UCITS ETF sub-fund will take an exposure on the components of its Index.The fund generally takes exposure to eligible liquid corporate bonds, issued by investment grade companies from the Bloomberg Barclays Euro Area Liquid Corporates™ Index via direct investment.In selecting bonds, their maturities, type and the size of the issue are checked.The Fund invests in a portfolio that consists of component securities of the index.

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates UCITS ETF (hedged to CHF) A-accLU1048317538

Physical

0.23%

17.7793 CHF

UBS ETF (LU) Bloomberg Barclays TIPS 1-10 UCITS ETF (hedged to GBP) A-accLU1459801947

Physical

0.20%

13.468 GBP

UBS ETF (LU) Bloomberg Barclays MSCI Euro Area Liquid Corporates Sustainable UCITS ETF (EUR) A-accLU1484799843

Physical

0.20%

15.0489 EUR

UBS ETF (LU) Bloomberg Barclays US 1-3 Year Treasury Bond UCITS ETF (USD) A-accLU0950676113

Physical

0.12%

13.4751 USD

UBS ETF (LU) Bloomberg Barclays MSCI Euro Area Liquid Corporates Sustainable UCITS ETF (hedged to CHF) A-accLU1484800955

Physical

0.25%

14.4183 CHF

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates UCITS ETF (hedged to EUR) A-accLU1048317025

Physical

0.23%

18.9874 EUR

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates 1-5 UCITS ETF (hedged to GBP) A-disLU1048315326

Physical

0.23%

13.9736 GBP

UBS ETF (LU) Bloomberg Barclays TIPS 1-10 UCITS ETF (hedged to EUR) A-accLU1459801780

Physical

0.20%

10.9395 EUR

UBS ETF (LU) Bloomberg Barclays TIPS 1-10 UCITS ETF (USD) A-accLU1459801517

Physical

0.15%

13.1691 USD

UBS ETF (LU) Bloomberg Barclays US 1-3 Year Treasury Bond UCITS ETF (hedged to EUR) A-disLU1324510525

Physical

0.17%

11.1665 EUR

UBS ETF (LU) Bloomberg Barclays MSCI US Liquid Corporates Sustainable UCITS ETF (USD) A-disLU1215461085

Physical

0.20%

17.8067 USD

UBS ETF (LU) Bloomberg Barclays Euro Area Liquid Corporates 1-5 UCITS ETF (EUR) A-disLU1048314196

Physical

0.18%

13.7928 EUR

UBS ETF (LU) Bloomberg Barclays USD Emerging Markets Sovereign UCITS ETF (hedged to EUR) A-accLU1324516308

Physical

0.47%

12.5606 EUR

UBS ETF (LU) Bloomberg Barclays Euro Inflation Linked 1-10 UCITS ETF (EUR) A-disLU1645380368

Physical

0.20%

14.9697 EUR

UBS ETF (LU) Bloomberg Barclays TIPS 10+ UCITS ETF (USD) A-disLU1459802754

Physical

0.20%

14.7452 USD

UBS ETF – Bloomberg Barclays EUR High Quality Liquid Assets 1-5 Bond UCITS ETF (EUR) A-disLU1805389258

Physical

0.18%

10.9704 EUR

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates 1-5 UCITS ETF (USD) A-disLU1048314949

Physical

0.18%

14.7314 USD

UBS ETF (LU) Bloomberg Barclays USD Emerging Markets Sovereign UCITS ETF (hedged to GBP) A-disLU1324516480

Physical

0.47%

11.122 GBP

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates 1-5 UCITS ETF (hedged to CHF) A-accLU1048315755

Physical

0.23%

13.889 CHF

UBS ETF (LU) Bloomberg Barclays MSCI Euro Area Liquid Corporates Sustainable UCITS ETF (EUR) A-disLU1484799769

Physical

0.20%

14.6031 EUR

UBS ETF (LU) Bloomberg Barclays US 10+ Year Treasury Bond UCITS ETF (hedged to EUR) A-disLU1459800113

Physical

0.25%

10.6542 EUR

UBS ETF (LU) Bloomberg Barclays MSCI Euro Area Liquid Corporates Sustainable UCITS ETF (hedged to CHF) A-disLU1484800872

Physical

0.25%

14.1869 CHF

UBS ETF (LU) Bloomberg Barclays TIPS 10+ UCITS ETF (hedged to GBP) A-disLU1459803133

Physical

0.25%

13.8274 GBP

UBS ETF (LU) Bloomberg Barclays MSCI US Liquid Corporates Sustainable UCITS ETF (hedged to EUR) A-accLU1215461325

Physical

0.25%

16.4534 EUR

UBS ETF (LU) Bloomberg Barclays MSCI US Liquid Corporates Sustainable UCITS ETF (hedged to CHF) A-disLU1215461754

Physical

0.25%

15.0521 CHF

UBS ETF (LU) Bloomberg Barclays Euro Area Liquid Corporates 1-5 UCITS ETF (hedged to USD) A-accLU1048314436

Physical

0.23%

15.6409 USD

UBS ETF (LU) Bloomberg Barclays TIPS 1-10 UCITS ETF (hedged to CHF) A-accLU1459802168

Physical

0.20%

11.778 CHF

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates 1-5 UCITS ETF (USD) A-accLU1048315086

Physical

0.18%

16.3761 USD

UBS ETF (LU) Bloomberg Barclays US 7-10 Year Treasury Bond UCITS ETF (USD) A-accLU0950676469

Physical

0.12%

12.5606 USD

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates 1-5 UCITS ETF (hedged to EUR) A-accLU1048315243

Physical

0.23%

14.7549 EUR

UBS ETF (LU) Bloomberg Barclays USD Emerging Markets Sovereign UCITS ETF (USD) A-accLU1324517454

Physical

0.42%

13.9736 USD

UBS ETF (LU) Bloomberg Barclays MSCI US Liquid Corporates Sustainable UCITS ETF (USD) A-accLU1215461168

Physical

0.20%

20.1119 USD

UBS ETF (LU) Bloomberg Barclays EUR Treasury 1-10 UCITS ETF (EUR) A-disLU0969639128

Physical

0.17%

12.7659 EUR

UBS ETF (LU) Bloomberg Barclays MSCI US Liquid Corporates Sustainable UCITS ETF (hedged to GBP) A-disLU1215461598

Physical

0.25%

11.0804 GBP

UBS ETF (LU) Bloomberg Barclays Euro Area Liquid Corporates 1-5 UCITS ETF (hedged to CHF) A-accLU1048314865

Physical

0.23%

13.4262 CHF

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates interest rate hedged UCITS ETF (USD) A-disLU1589326013

Physical

0.23%

14.2519 USD

UBS ETF (LU) Bloomberg Barclays US 7-10 Year Treasury Bond UCITS ETF (USD) A-disLU0721552973

Physical

0.12%

44.4472 USD

UBS ETF (LU) Bloomberg Barclays Euro Inflation Linked 10+ UCITS ETF (EUR) A-disLU1645381689

Physical

0.20%

20.2333 EUR

UBS ETF (LU) Bloomberg Barclays US 1-3 Year Treasury Bond UCITS ETF (USD) A-disLU0721552544

Physical

0.12%

25.1198 USD

UBS ETF (LU) Bloomberg Barclays USD Emerging Markets Sovereign UCITS ETF (hedged to CHF) A-accLU1324516720

Physical

0.47%

12.1339 CHF

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates UCITS ETF (USD) A-disLU1048316647

Physical

0.18%

17.7723 USD

UBS ETF (LU) Bloomberg Barclays US Liquid Corporates UCITS ETF (hedged to GBP) A-disLU1048317298

Physical

0.23%

17.2399 GBP

Markit indices

Fundname ISIN Replication Fee Last NAV
Currency
Fact sheet

UBS ETF (LU) Markit iBoxx € Germany 1-3 UCITS ETF (EUR) A-disLU0721553351

Physical

0.17%

77.602 EUR

Fund description

UBS ETF Markit iBoxx € Germany 1-3 is an exchange-traded fund incorporated in Luxemburg.The Markit iBoxx € Germany 1-3 Index is a market capitalization weighted index.The index includes bonds issued by the Republic of Germany.The Fund invests in a portfolio that consists of component securities of the index.

SBI indices


Get to know us – we gladly assist you in finding the answers you need