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UBS reduces TER on Barclays TIPS ETF

UBS Asset Management has reduced the TER on the UBS ETF Barclays TIPS 1-10 UCITS ETF with the new pricing effective from 1st of April 2017.
The initiative sees the TER for the unhedged share class fall from 0.20 per cent to 0.15 per cent while the currency hedged shares classes are reduced from 0.25 per cent to 0.20 per cent.

The firm writes that the fee reduction is possible thanks to the greater economies of scale achieved through the ETF’s growing AuM. Launched in September 2016, the UBS ETF Barclays TIPS 1-10 UCITS ETF has attracted inflows of USD470 million YTD and total assets now surpass USD600 million.

Interest in the ETF has been driven by investors seeking to protect themselves from increased concerns of rising inflation in the US following Trump’s election and expectations on policy change, UBS says.

The ETF is designed to provide transparent and structured exposure to a benchmark of US Treasury Inflation-Protected Securities (TIPS) with shorter duration. In addition, the currency-hedged version allows investors to participate in USD funded investments whilst mitigating the impact of adverse currency fluctuations.

Discussing the success of the ETF, Clemens Reuter, Global Head of Investment Specialists Passive & ETFs, says: “After an extended period of low interest rates there is growing evidence in markets of inflationary pressures starting to build, particularly in the US. With this innovative fixed income product, our clients are able to protect long-term purchasing power and gain access to an asset class that compounds the real rate of return.

“UBS Asset Management continues to expand its fixed income ETF range by providing solutions which meet the needs of clients. Fixed income represents a growth area for the passives and ETFs market.”

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