UBS Asset Management has extended currency hedging for its exchange-traded funds (ETFs) to smart beta products, listing eight products on the London Stock Exchange.
Investors will be able to hedge currency risk in sterling with ETF exposure to low volatility, value, quality and yield factors.
The products were developed in conjunction with index provider MSCI and the investment approach is based on the premise that the factors will outperform standard market-cap weighted indices.
Giving examples of hedging benefits, the firm says that from September 2010 to September 2015 a French or German investor in the MSCI European Monetary Union index would have enjoyed an annual return of 6.38%, while an unhedged sterling investor in that index would have seen annual returns of 3.45%.
“It is becoming increasingly evident that alternative beta or factor Investing is a category that is growing in interest for clients and will increasingly be considered a core part of portfolios,” said Andrew Walsh, head of UK and Ireland ETF sales at UBS.
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