James Williams, Hedgeweek

Vanguard cuts the costs to 25 of its ETFs and tracker funds … GAM launches US mortgage backed securities (MBS) UCITS fund…

Lyxor Asset Management has expanded its range of ETFs available on the London Stock Exchange with the launch of four new European equity products:

-       LYXOR UCITS ETF FTSE Developed Europe ex UK
-       LYXOR UCITS ETF CAC 40
-       LYXOR UCITS ETF DAX
-       LYXOR UCITS ETF FTSE MIB

The extension of the European ETF range is part of Lyxor’s drive to provide more choice around key exposures. Through these new Lyxor ETFs, investors can be more specific with their European exposure, targeting specific countries or regions to gain the precise exposure they require.

Three of the new products will use physical replication to provide investors with exposure to some of Europe’s key markets. The LYXOR UCITS ETF FTSE MIB will replicate its index on a synthetic basis.

The launch of these products reflects Lyxor’s continued commitment to the UK market, and the company’s pragmatic approach to replication, which allows them to select the replication method they believe will deliver the best performance and risk profile relative to the index being tracked.

Commenting on the product launches, Arnaud Llinas, Global Head of Lyxor ETFs, said: “The UK represents a key strategic market for Lyxor and we continue to see significant opportunities to expand our capabilities in the region. The launch of these products reflects our ongoing effort to grow our product range for the benefit of our clients and the continued demand from investors for exposure to key European markets."
 
Swiss asset manager GAM has launched a UCITS fund investing in US mortgage-backed securities (MBS). The Dublin-domiciled Gam Star MBS Total Return fund will be managed by Gary Singleterry and Tom Mansley, who joined the firm in June 2014 when the firm bought their boutique, Singleterry Mansley Asset Management.

The fund invests mainly in residential MBS, issued both by US government agencies and by non-agency entities. In the current environment, the fund aims to deliver returns of the three-month Libor rate +4 to +6 per cent per annum. 
 

 
With the launch of this fund, GAM is adding to its fixed income investment offering. It already manages assets of approximately USD2bn in the GAM catastrophe bond strategy and around USD1.5bn in the GAM Star Credit Opportunities family of funds.
 

 
Mansley said that the US market for mortgage-backed securities had been in a “slow recovery mode” over the past six years. He said that it constitutes a highly liquid, diversified market with USD7tn in assets and accounts for more than 30 per cent of the US fixed income market.
 
“Our experience shows that the asset class is suited to virtually every stage of the economic cycle. We believe that in addition to careful security selection and portfolio construction, the key to successful investing lies in anticipating and positioning for changes in the interest rate, prepayment and credit environment,” commented Mansley.
 

 
Craig Wallis, global head of institutional and fund distribution at GAM, added: “In the current environment of yield compression in so many fixed income assets, we are seeing growing client interest in more specialised forms of fixed income. Active managers can add value versus the market, and the approach applied by our team has proven to deliver consistent returns and capital appreciation for the highly discerning US institutional client segment over many years. We are pleased that our UCITS fund now makes these skills accessible to a much broader group of investors worldwide.”
 
Vanguard has acted to cut charges on a swathe of tracker funds and ETFs as the battle for investor dollars among the industry’s largest asset managers continues. As reported by Citywire Money this week, charges have been cut on 25 funds. Three funds have seen their costs cut by 50 per cent: the US Equity Index fund, the FTSE Developed World ex-UK Equity Index fund and the FTSE Developed Europe ex-UK Equity Index fund, which now carry costs of 0.1 per cent, 0.15 per cent and 0.12 per cent respectively.
 
Costs in the Vanguard FTSE Emerging Markets ETF (VFEM) have been cut from 0.29 per cent to 0.25 per cent making it the joint cheapest EM-focused ETF alongside the iShares Core MSCI Emerging Markets IMI UCITS ETF.
 
Tom Rampulla, managing director for Vanguard in Europe, was quoted as saying: “As we broaden our presence in Europe, we will leverage operating efficiencies and use our increasing global scale to keep costs to a minumum for investors. Importantly, existing investors will automatically benefit from the new charges, as they always do when we lower the costs of our funds.”

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