UBS ETF - BLOOMBERG BARCLAYS TIPS 10+ UCITS ETF HDG A-DIS USD ETF
| Issuer: UBS |
| Asset Class: Fixed Income |
| TER: 13bps |
| Trading Currency: GBX |
| Pays Income: False |
| Listing Date: 07 Feb 2019 |
| Ticker: T10G |
| ISIN: LU1459803133 |
This investment vehicle provides targeted exposure to long-duration US Treasury Inflation-Protected Securities (TIPS). Specifically, it tracks an index composed of US dollar-denominated, fixed-rate, inflation-linked sovereign bonds issued by the US Treasury with maturities of ten years or longer. The principal value of these bonds adjusts with changes in the Consumer Price Index (CPI), offering a direct hedge against inflation. This makes the fund a strategic tool for investors seeking to preserve the real value of their capital in an inflationary environment. The portfolio is physically replicated, meaning it holds the actual underlying bonds that constitute the index, providing direct exposure.
This particular share class is currency-hedged, which is a crucial feature for investors whose home currency is not the US dollar. By hedging the portfolio's US dollar exposure back to the British pound, it aims to mitigate the impact of fluctuations between the two currencies on investment returns. This makes it particularly suitable for UK-based investors or those with liabilities in sterling who want to access the US TIPS market without taking on additional currency risk. The distributing nature of the fund, with semi-annual payouts, may also appeal to those seeking regular income streams from their fixed-income allocation.
The primary rationale for investing in this fund is to protect a portfolio from the erosive effects of rising consumer prices. Long-duration TIPS can be particularly sensitive to changes in real interest rates, but their inflation-adjustment mechanism provides a stable real return. This instrument is well-suited for a core fixed-income holding, especially during periods of economic uncertainty or when inflation expectations are on the rise. It offers a combination of credit quality, as it invests in US government debt, and a direct link to inflation, diversifying a traditional portfolio of nominal bonds and equities.
