Lyxor AM has launched an ETF which protects investors against rising interest rates in the US, the Lyxor $ Floating Rate Note UCITS ETF.
The ETF provides exposure to US dollar denominated corporate bonds, which increase their coupon as the three month Libor rate rises meaning the yield is protected in the event of a rise in rates.
The index tracked by the ETF will only invest in investment grade bonds with over two years to maturity and $500m outstanding in order to help maintain liquidity.
It has a total expense ratio of 0.15% and the firm will be launching a euro hedged version shortly.
Across Europe, Floating Rate Bond ETFs have seen €2bn in net new assets this year as investors look to further rate hikes in the US this year.
Francois Millet, head of product line management, ETFs & indexing at Lyxor said: "For us it was important to create a simple, low cost way for investors to access the US dollar denominated FRN market. As a Luxembourg SICAV, this ETF will be attractive to investors right across Europe."
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