Amundi US Curve steepening 2-10Y UCITS ETF GBP Hedged Dist

Issuer: Amundi ETF

Asset Class: Fixed Income

TER: 35bps

Trading Currency: GBP

Pays Income: False

Listing Date: 06 Jun 2023

Ticker: STPH

ISIN: LU2018762901

This actively managed fund offers a sophisticated strategy designed to capitalize on changes in the shape of the U.S. Treasury yield curve. Specifically, it aims to profit from a 'steepening' of the curve, which occurs when the gap between long-term and short-term interest rates widens. This scenario typically unfolds when the market anticipates stronger economic growth, rising inflation, or shifts in central bank monetary policy, causing longer-term bond yields to rise more quickly (or fall more slowly) than shorter-term yields.

To achieve its objective, the fund implements a targeted position using futures contracts. It establishes a long position in 2-year U.S. Treasury Note futures while simultaneously taking a short position in 10-year U.S. Treasury Note futures. This structure is intended to isolate the relative performance between these two points on the yield curve, making its returns dependent on the changing slope rather than the absolute direction of interest rates. As an actively managed product, the portfolio managers have the discretion to adjust the positioning based on their market outlook. This specific share class also incorporates a monthly currency hedge to mitigate the impact of fluctuations between the U.S. dollar and the British pound.

This product serves as a tactical tool for investors looking to express a specific macroeconomic view on the U.S. economy and the Federal Reserve's policy trajectory. It can be particularly attractive during periods of economic recovery or at the onset of a rate-hiking cycle. Furthermore, it can act as a unique diversifier within a traditional fixed-income portfolio, as its performance drivers differ significantly from conventional bond funds that primarily benefit from falling interest rates.