UBS has introduced income-accumulating share classes for five of its fixed income ETFs on SIX Swiss Exchange.
The new share classes will appeal to investors looking for income to be accumulated within their portfolios.
The funds, which track Bloomberg Barclays indices and offer a variety of exposures, including to US Treasuries, US corporates, and EM sovereigns, complement the existing income-distributing shares.
Each fund is physically replicating and trades in US dollars.
US Treasuries
The UBS Bloomberg Barclays 1-3 Year Bond ETF (UT1US SW) provides exposure to US Treasury bonds with short maturities. The underlying Bloomberg Barclays 1-3 Year Bond Index includes Treasury bonds with a time to maturity between one and three years.
The fund may suit investors looking to limit the interest rate risk of their portfolio in a time when central banks are beginning to normalise rates. The index’s modified duration is 1.87 years and its yield to maturity is 1.89%. It has a total expense ratio (TER) is 0.20%.
The UBS Bloomberg Barclays 7-10 Year Bond ETF (UT7US SW) provides exposure to US Treasury bonds with intermediate maturities. The underlying Bloomberg Barclays 7-10 Year Bond Index only includes bonds with a time to maturity of at least seven years but no more than ten years.
The fund naturally has higher interest-rate risk compared to its shorter-duration cousin – the underlying index has a modified duration of 7.62 years – but also an increased yield to maturity of 2.38%. Its TER is also 0.20%.
US corporates
The UBS Bloomberg Barclays US Liquid Corporates 1-5 Year ETF (CBUS5A SW) provides exposure to investment grade, USD-denominated securities issued by US corporate issuers operating in financial, industrial and utility sectors. The underlying Bloomberg Barclays US Liquid Corporates 1-5 Year Index only tracks bonds with remaining maturities between one and five years.
Interest-rate risk is relatively low with a modified duration of 2.99 years, and the index is currently yielding 2.58%. Issuers from the industrial (57.0%) and financial services (41.4%) sectors dominate the index’s total weight. The majority of issuers in the index come from the lower end of the investment grade credit scale with the largest credit quality weightings being BBB+ (25.2%), A- (20.0%) and BBB (10.2%). The ETF’s TER is 0.18%.
The UBS Bloomberg Barclays US Liquid Corporates ETF (CBUSAC SW) provides exposure to a wider range of US investment grade corporate bonds from across the yield curve. The underlying Bloomberg Barclays US Liquid Corporates Index is still constrained to issuers from the financial, industrial and utility sectors only, however.
Issuers from the industrials sector make up over two-thirds (69.1%) of the total index weight, followed by issuers from the financial services sector (28.9%). The largest credit quality exposures are to bonds rated BBB+ (25.2%), A- (19.9%) and BBB (10.2%). The index is yielding 3.31% and interest rate risk is significantly higher with a modified duration of 8.21 years. It also charges 0.18%.
Emerging market sovereigns
The UBS Bloomberg Barclays USD EM Sovereign ETF (SBEMA SW) provides exposure to fixed and floating-rate US dollar-denominated debt issued by sovereign and agency EM issuers. Corporate issues are not eligible. Securities are weighted by market capitalization, and country weights are capped at 3% of total amount outstanding of all eligible issues. The underlying index is the Bloomberg Barclays Emerging Markets USD Sovereign & Agency 3% Country Capped Index.
The index’s modified duration is 6.49 years and its yield to maturity is 4.9%. Its TER is 0.42%.