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Lyxor lists inflation linked ETF

Lyxor lists inflation linked ETF

Lyxor has listed an inflation-linked exchange-traded fund (ETF) as increasing number of investors consider how to hedge price rises.

The Lyxor UK£ 10Y Inflation Expectations Ucits ETF, which the firm claims as the first of its kind, tracks the Markit iBoxx GBP Breakeven 10-Year Inflation Index.

The fund will carry an ongoing charge of 0.25%.

This is the third inflation-linked ETF Lyxor has recently launched. In April last year it launched the Lyxor EUR 2-10Y Inflation Expectations Ucits ETF and Lyxor US$ 10Y Inflation Expectations Ucits ETF.

Adam Laird, head of ETF strategy, Northern Europe, said: ‘This hedging is important – the Bank of England’s Monetary Policy Committee uses interest rates to control inflation, so when inflation rises, often a rate hike soon follows.

'This is a risk for bond investors, as rate hikes come hand in hand with bond price drops.

'But it is of particular concern for UK Index Linked Bond investors. This asset class has a high duration, so is particularly vulnerable to Bank of England policy.’

Two weeks ago, Lyxor entered the green space with the launch of what it claimed to be the world’s first green bond exchange-traded fund (ETF).

The Lyxor Green Bond (DR) Ucits ETF tracked the Solactive Green Bond EUR-USD IG Index.


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