UBS unveils pair of active government bond ETFs

UBS Asset Management (UBS AM) has unveiled a pair of actively managed government bond ETFs – one covering US Treasuries, the other European sovereign bonds.

The UBS EUR Treasury Yield Plus UCITS ETF (CSHW) and the UBS USD Treasury Yield Plus UCITS ETF USD (CHSY) both debut with a total expense ratio (TER) of 0.15%.

CHSW will trade on Deutsche Boerse, Borsa Itailiana and SIX Swiss Exchange while CHSY will have an additional listing on the London Stock Exchange.

Both strategies are targeting a higher option-adjusted spread (OAS) than their underlying Bloomberg Treasury indices but without diverging significantly from the duration, credit quality and country exposure of the benchmark.

They will do so by expanding the investment universe to include both high-quality supranational and agency (SSA) bonds, both of which can offer higher yields than government debt.

The portfolio construction will be part systematic and part discretionary.

The SSA bonds are chosen using a proprietary rules-based model that maximises OAS while imposing strict constraints on rating, country, sector, duration and curve risk.

However, the portfolio manager can use their discretion to boost the ETF’s yield and alter its risk profile.

Commenting on the launch, André Mueller, head of client coverage at UBS AM, said the firm “has longstanding expertise in rules-based strategies so I’m delighted we can offer this capability, for the first time, to a wider range of clients through the convenient, transparent and efficient ETF wrapper”.

Active fixed income has been an area of focus for ETF issuers in recent months and last week Robeco became the latest asset manager to enter the fray.

ETF Stream revealed in May that UBS AM was plotting a push into the active ETF space and it shortly debuted its first actively managed product – a CLO strategy.

Last week, the Swiss asset manager launched Europe’s first MSCI world mega cap ETFs.