Financing the future: how bond markets can help build a better world

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Please read the important information below before continuing to our website

Please read the important information below before continuing to our website.

Investing involves risk, including possible loss of principal. An investor should carefully consider investment objectives, risks, charges and expenses before investing.

By clicking on your client type to enter the website, you are confirming that you have read and understood the important information that is contained below, and you accept the terms of the Privacy and Cookies policy.

THIS WEBSITE IS AIMED AT PROFESSIONAL CLIENTS IN SWEDEN

This website is published by Lyxor International Asset Management (LIAM), a French asset management company approved by the AMF (17 place de la Bourse 75082 Paris Cedex 02) under the UCITS (2009/65/EC) and AIFM (2011/31/EU) directives.

The website is hosted by on Microsoft Azure servers.

This website is subject to French and Swedish law, as applicable.

A professional client is a client that is either a per se professional client or an elective professional client (Note article 4 (1) 12 of Mifid )

A professional client is one of the following:

– an entity required to be authorised or regulated to operate in the financial markets. The following list includes all authorised entities carrying out the characteristic activities of the entities mentioned, whether authorised by an EEA State or a third country and whether or not authorised by reference to a directive:

a credit institution
an investment firm
any other authorised or regulated financial institution
an insurance company
a collective investment scheme or the management company of such a scheme
a pension fund or the management company of a pension fund
a commodity or commodity derivatives dealer
a local
any other institutional investor

– in relation to MiFID or equivalent third country business, a large undertaking, meeting two of the following size requirements on a company basis:

balance sheet total of EUR 20,000,000
net turnover of EUR 40,000,000
own funds of EUR 2,000,000

– in relation to business that is neither MiFID or equivalent third country business, a large undertaking meeting either of the following conditions:

a body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) called up share capital of at least £10 million (or its equivalent in any other currency at the relevant time)
a large undertaking that meets (or any of whose holding companies or subsidiaries meets) two of the following tests: (i) a balance sheet total of EUR 12,500,000; (ii) a net turnover of EUR 25,000,000; (iii) an average number of employees during the year of 250
a national or regional government, a public body that manages public debt, a central bank, an international or supranational institution (such as the World Bank, the IMF, the ECP, the EIB) or another similar international organisation.
another institutional investor whose main activity is to invest in financial instruments (in relation to the firm's MiFID or equivalent third country business) or designated investments (in relation to the firm's other business). This includes entities dedicated to the securitisation of assets or other financing transactions.

The above definition is only an extract and is not exhaustive. For further details please refer to the Glossary section of the FSA Handbook: http://fsahandbook.info/FSA/html/handbook/Glossary/P

Lyxor and Lyxor ETF are names used by Lyxor Asset Management UK LLP to promote the products of Lyxor International Asset Management. Although information contained herein is from sources believed to be reliable, Lyxor Asset Management UK LLP makes no representation or warranty regarding the accuracy of any information. Any reproduction, disclosure or dissemination of these materials is prohibited.

Marketing Restrictions and Implications

Lyxor UCITS compliant Exchange Traded Funds (Lyxor UCITS ETFs) referred to on this website are open ended mutual investment funds (i) established under the French law and approved by the Autorité des Marchés Financiers (the French Financial Markets Authority), or (ii) established under the Luxembourg law and approved by the Commission de Surveillance du Secteur Financier (the Luxembourg Financial Supervisory Committee). Most, if not all, of the protections provided by the Swedish regulatory system generally and for funds authorised in Sweden do not apply to these exchange traded funds (ETFs). In particular, investors should note that holdings in this product will not be covered by the provisions of the Financial Services Compensation Scheme, or by any similar scheme in France.

This website is exclusively intended for persons who are not "US persons", as such term is defined in Regulation S or the US Securities Act 1933, as amended, and who are not physically present in the US. This website does not constitute an offer or an invitation to purchase any securities in the United States or in any other jurisdiction in which such offer or invitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Potential users of this website are requested to inform themselves about and to observe any such restrictions.

Index Replication Process

Lyxor UCITS ETFs follow both physical and synthetic index replication process.

However, most Lyxor UCITS ETFs follow synthetic replication process. This consists of entering into a derivative transaction (a ‘Performance Swap’, as defined below) with a counterparty that provides complete and effective exposure to its benchmark index. Lyxor has adopted this methodology in order to minimise tracking error, optimise transaction costs and reduce operational risks.

A Performance Swap is a contractual agreement which is negotiated over-the-counter (OTC) between two parties: the Lyxor UCITS ETF and its counterparty. From a risk perspective, each Performance Swap ranks equally with other senior unsecured obligations of the counterparty, such as common bonds (i.e., same rights to payments). In the Performance Swap, the counterparty of the Lyxor UCITS ETF commits to pay the Lyxor UCITS ETF a variable return based on a pre-determined benchmark index, instead of a fixed stream of income (as in bonds). At the same time, the counterparty will receive from the Lyxor UCITS ETF the performance and any related revenues generated by the basket's assets (excluding the value of the Performance Swap) held by the Lyxor UCITS ETF. Information provided on individual ETFs includes data on the basket relating to the ETF and the percentage value of the basket represented by each asset. The information is relevant to the closing values on the date given.

Investment Risks

The Lyxor UCITS ETFs described on this website are not suitable for everyone. Investors' capital is at risk. Investors should not deal in this product unless they understand, having obtained independent professional advice where necessary, its nature, terms and conditions, and the extent of their exposure to risk. The value of the product can go down as well as up and can be subject to volatility due to factors such as price changes in the underlying instrument and interest rates. If a fund is quoted in a different currency to the index, currency risks exist.

Prior to any investment in any Lyxor UCITS ETF, you should make your own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us. We recommend that you consult your own independent professional advisors (including legal, tax, financial or accounting advisors, as appropriate).

Specific Risks

· Capital at Risk. ETFs are tracking instruments: Their risk profile is similar to a direct investment in the Benchmark Index. Investors’ capital is fully at risk and investors may not get back the amount originally invested. Investments are not covered by the provisions of the Financial Services Compensation Scheme (“FSCS”), or any similar scheme.

· Counterparty Risk. Investors may be exposed to risks resulting from the use of an OTC Swap with Societe Generale. Physical ETFs may have Counterparty Risk resulting from the use of a Securities Lending Programme.

· Currency Risk. ETFs may be exposed to currency risk if the ETF or Benchmark Index holdings are denominated in a currency different to that of the Benchmark Index they are tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns.

· Replication Risk. ETFs are designed to replicate the performance of the Benchmark Index. Unexpected events relating to the constituents of the Benchmark Index may impact the Index provider’s ability to calculate the Benchmark Index, which may affect the ETF’s ability to replicate the Benchmark Index efficiently. This may create Tracking Error in the ETF.

· Underlying Risk. The Benchmark Index of a Lyxor ETF may be complex and volatile. When investing in commodities, the Benchmark Index is calculated with reference to commodity futures contracts which can expose investors to risks related to the cost of carry and transportation. ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks.

· Liquidity Risk. On-exchange liquidity may be limited as a result of a suspension in the underlying market represented by the Benchmark Index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, Societe Generale or other Market Maker systems; or an abnormal trading situation or event.

The securities can be neither offered in nor transferred to the United States.

Tax

Any statement in relation to tax, where made, is generic and non-exhaustive and is based on our understanding of the laws and practice in force as of the date of this document and is subject to any changes in law and practice and the interpretation and application thereof, which changes could be made with retroactive effect. Any such statement must not be construed as tax advice and must not be relied upon. The tax treatment of investments will, inter alia, depend on an individual’s circumstances. Investors must consult with an appropriate professional tax adviser to ascertain for themselves the taxation consequences of acquiring, holding and/or disposing of any investments mentioned on this website.

Further information on the risk factors are available in the [Risk Warning – link to risk page] section of the website.

Any fund prospectus and supplements are available at www.lyxoretf.se. Information given about the past performance of the funds is no guarantee of future performance. No investment decision should be taken without reading the fund prospectus and any fund supplement of the fund concerned.

Although the content of the website is based upon information that LIAM consider reliable or comes from sources that LIAM consider reliable, LIAM have not verified such information. Lyxor make no representation or warranty as to the accuracy, completeness or adequacy of any information. Any reproduction, disclosure or dissemination of the materials available on the website is prohibited.

No information published on the LIAM Website constitutes a solicitation, an offer, or a recommendation to buy or sell any investment instruments, to effect any transactions, or to conclude any legal act of any kind whatsoever.

Limitation of Liability

To the fullest extent and only restricted by mandatory law, in no event shall LIAM or any of its directors, employees or agents have any liability whatsoever to any person for any direct or indirect loss, liability, cost, claim, expense or damage of any kind, whether in contract or in tort, including negligence, or otherwise, arising out of or related to the use of all or part of these web pages

Cookies

This website uses cookies to make the website work or improve your user experience. Cookies are small text files that are saved on your computer or device, which are used for several purposes such as detecting preferences and improving site navigation. By continuing to use this website you consent for cookies to be used. For more details, including how to amend your preferences, please read our [Cookies Policy] link to privacy & cookie page.

By clicking on your client type to enter the website, you shall be deemed to have represented to us that you are not a U.S. person and that you are not located in the United States of America, its territories and possessions, and any State of the United States of America and that you are authorised to receive the information to and on this website.

I CONFIRM THAT I HAVE READ AND UNDERSTOOD THE IMPORTANT INFORMATION THAT IS CONTAINED ABOVE AND ACCEPT THE TERMS OF THE PRIVACY AND COOKIES POLICY.

A private investor is a self directed retail client who is making investment decisions on their own behalf in their personal stock broking account, Self Invested Personal Pension or individual savings account

A financial Adviser is a qualified investment professional who provides financial advice or guidance to investors based on their own personal financial situation and risk profile

A professional client is a client that is either a per se professional client or an elective professional client (Note article 4 (1) 12 of Mifid ):

An entity required to be authorised or regulated to operate in the financial markets. The following list includes all authorised entities carrying out the characteristic activities of the entities mentioned, whether authorised by an EEA State or a third country and whether or not authorised by reference to a directive:
- a credit institution
- an investment firm
- any other authorised or regulated financial institution
- an insurance company
- a collective investment scheme or the management company of such a scheme
- a pension fund or the management company of a pension fund
- a commodity or commodity derivatives dealer
- a local
- any other institutional investor
In relation to MiFID or equivalent third country business, a large undertaking, meeting two of the following size requirements on a company basis:
- balance sheet total of EUR 20,000,000
- net turnover of EUR 40,000,000
- own funds of EUR 2,000,000
In relation to business that is neither MiFID or equivalent third country business, a large undertaking meeting either of the following conditions:
- a body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) called up share capital of at least £10 million (or its equivalent in any other currency at the relevant time)
- a large undertaking that meets (or any of whose holding companies or subsidiaries meets) two of the following tests: (i) a balance sheet total of EUR 12,500,000; (ii) a net turnover of EUR 25,000,000; (iii) an average number of employees during the year of 250
- a national or regional government, a public body that manages public debt, a central bank, an international or supranational institution (such as the World Bank, the IMF, the ECP, the EIB) or another similar international organisation.
- another institutional investor whose main activity is to invest in financial instruments (in relation to the firm's MiFID or equivalent third country business) or designated investments (in relation to the firm's other business). This includes entities dedicated to the securitisation of assets or other financing transactions

The above definition is only an extract and is not exhaustive. For further details please refer to the Glossary section of the FSA Handbook: https://www.handbook.fca.org.uk/handbook/glossary/

The information on this website is published by Lyxor Asset Management UK LLP (Lyxor UK), a member of the Société Générale group of companies ("Lyxor UK Group"). Lyxor UK is authorized by Financial Conduct Authority in the UK, under FCA Registration Number 435658.

You should note that an investment in any of these Exchange Traded Funds will not be covered by the provisions of the Financial Services Compensation Scheme, or by any similar scheme.

Although information contained herein is from sources believed to be reliable, Lyxor UK makes no representation or warranty regarding the accuracy of any information. Any reproduction, disclosure or dissemination of these materials is prohibited. This site is maintained by Lyxor UK, 1 Bank Street, Canary Wharf, London, E14 4SG.

GENERAL GUIDANCE

Lyxor UK is the promoter of Lyxor UK Exchange Traded Funds. You cannot trade directly with Lyxor UK.

A number of technical terms are used on this website. If you are in any doubt as to the meaning of such terms, then you should first consult Academy section. There is also a FAQ function which explains some of the terms contained in the website. If you require further clarification please do not hesitate to contact us directly on info@lyxoretf.co.uk, or call 0800 707 6956.

INVESTMENT RISKS

The Lyxor UCITS ETFs described on this website are not suitable for everyone. Investors capital is at risk. Investors should not deal in this product unless they understand, having obtained independent professional advice where necessary, its nature, terms and conditions, and the extent of their exposure to risk. The value of the product can go down as well as up and can be subject to volatility due to factors such as price changes in the underlying instrument and interest rates. If a fund is quoted in a different currency to the index, currency risks exist. Prior to any investment in any Lyxor UCITS ETF, you should make your own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us. We recommend that you consult your own independent professional advisors (including legal, tax, financial or accounting advisors, as appropriate)

SPECIFIC RISKS

Counterparty risk: Through Lyxor UCITS ETFs, investors are exposed to counterparty risk resulting from the use of OTC swaps with Société Générale. Pursuant to the UCITS Directive 2009/65/EC (as may be amended), the exposure of a UCITS to a swap counterparty which is a credit institution for the purpose of the Directive, cannot exceed 10% of the total fund assets. It is recommended that potential investors study the fund prospectus before investing.

As of March 2020, the long term, senior, unsecured debt obligations of Société Générale were rated A by Standard and Poor’s Ratings Services (S & P) and A2 by Moody’s Investor’s Services Inc (Moody’s). Companies are rated by S&P from AAA (highest rating / most secure) to D (lowest rating / in default / most risky), and by Moody’s from Aaa (highest rating / most secure) to C (lowest rating / in default / most risky).

Liquidity risk: Société Générale is not the only market-maker for Lyxor UCITS ETFs. Société Générale and any other market makers supporting Lyxor UCITS ETFs on exchange must follow the respective London Stock Exchange (LSE) requirements and guidelines. On-exchange liquidity may be limited as a result of a suspension in the underlying market represented by the index tracked by the ETF; a failure in the LSE, Société Générale or other market-maker systems; or an abnormal trading situation or event.

PRODUCT SPECIFIC RISK FACTORS

Capital at Risk ETFs are tracking instruments: Their risk profile is similar to a direct investment in the Benchmark Index. Investors’ capital is fully at risk and investors may not get back the amount originally invested. Investments are not covered by the provisions of the Financial Services Compensation Scheme ("FSCS"), or any similar scheme.

Counterparty Risk Investors may be exposed to risks resulting from the use of an OTC (over the counter) Swap with Lyxor UK. Physical ETFs may have Counterparty Risk resulting from the use of a Securities Lending Programme.

Currency Risk ETFs may be exposed to currency risk if the ETF or Benchmark Index holdings are denominated in a currency different to that of the Benchmark Index they are tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns

Replication Risk ETFs are designed to replicate the performance of the Benchmark Index. Unexpected events relating to the constituents of the Benchmark Index may impact the Index provider’s ability to calculate the Benchmark Index, which may effect the ETF’s ability to replicate the Benchmark Index efficiently. This may create Tracking Error in the ETF.

The Benchmark Index of a Lyxor ETF may be complex and volatile. When investing in commodities, the Benchmark Index is calculated with reference to commodity futures contracts which can expose investors to risks related to the cost of carry and transportation. ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks.

Liquidity Risk On-exchange liquidity may be limited as a result of a suspension in the underlying market represented by the Benchmark Index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, Lyxor UK or other Market Maker systems; or an abnormal trading situation or event.

The Sub-Funds are recognised Collective Investment Schemes for the purposes of Section 264 of the Financial Services and Markets Act 2000 (the "FSMA") and the Prospectus is available to the general public in the United Kingdom on this website. You are advised that most, if not all, of the protections provided by the United Kingdom regulatory system generally and for UK authorised funds do not apply to recognised funds such as these Sub-Funds

The information on this website is published in the UK by Lyxor Asset Management UK LLP (Lyxor UK), which is authorized by the Financial Conduct Authority in the UK, under FCA Registration Number 435658.

The website is hosted by on Microsoft Azure servers.

This website is subject to French law and English Law

This website is published by Lyxor International Asset Management (LIAM), a simplified joint stock company (société par actions simplifiée) with capital of 1,059,696 euros, listed on the Nanterre Trade and Companies Register under the single identification number 419,223,375 and EPA number 6630Z.

Registered office: Tours Société Générale, 17 cours Valmy, 92800 Puteaux.

Intra-community VAT number: FR 50419223375
Legal representative and director of publication: Lionel Paquin, Chairman, Lyxor International Asset Management.

Managing editor: Nathalie Boschat, Head of the Lyxor Communications Department (Tel.: +33 1 42 14 83 21); e-mail: Nathalie.Boschat@sgcib.com).

This website is hosted on Microsoft Azure servers.
This website is subject to French law.

Professional regulation

LIAM is a French asset management company approved by the AMF (17 place de la Bourse 75082 Paris Cedex 02) under the UCITS (2009/65/EC) and AIFM (2011/31/EU) directives.

Site content

LIAM endeavors to ensure the accuracy and updating of information on this website, and reserves the right to modify the content at any time without notice. LIAM cannot however guarantee its completeness or the absence of modification by a third party (intrusion, virus). Moreover, LIAM accepts no liability in case of difficulty or inability to access the website due to an internet connection problem.

As such, LIAM does not accept liability for any consequential damages such as, but not limited to, losses arising from transactions made on the basis of the information, loss of profit, loss of business, loss resulting from an interruption of service, increased costs of access and information processing.

Similarly, LIAM cannot be held liable for factors beyond its control or any damage that may be suffered by your technical environment, including your computers, software, network equipment (modems, phones, etc.) and any equipment used to access or use the service and/or information.

Finally, LIAM cannot guarantee, and accepts no liability as regards the sequence, accuracy, absence of errors, veracity, currency, merchantability, quality, correctness or non-infringing character and availability of the information on this website.

You undertake to use the information contained on this website for personal, non-commercial purposes.

Information on products and services

The products and services offered by LIAM are not available in all jurisdictions, notably due to regulatory constraints. The terms and conditions relative to products and services (if any) are indicative. The information regarding products and services does not constitute on the part of LIAM or any of its affiliates either an offer to buy, sell or subscribe for financial products or services, or the solicitation of an offer to buy or sell.

LIAM assumes no liability for the accuracy, completeness or adequacy of the information derived from external sources, although the information is obtained from sources deemed reliable.

WHEN PAST PERFORMANCE OR SIMULATED PAST PERFORMANCE IS PRESENTED, THE DATA RELATED THERETO REFER TO PAST PERIODS, AND ARE NOT RELIABLE INDICATORS OF FUTURE RESULTS. THE SAME APPLIES TO VARIATIONS IN HISTORICAL MARKET DATA.

When simulations of future performance are presented, the data relative to these performances are only predictions, and are not a reliable indicator of the future performance of the product. Moreover, where past performance or simulated past performance are based on data expressed in a currency that is not that of the state of residence of the investor, potential gains may increase or decrease based on changes in exchange rates. Finally, where past performance or simulated performances (past or future) are presented, any gains can also be reduced by the effect of commissions, fees or other charges borne by the investor.

Anyone wishing to obtain any of the services or products presented on this website is requested to contact LIAM to inquire about the availability of the service or product in question, and the contractual terms and rates applicable to it.

Subscription of products and services

As part of its legal and regulatory obligations (including those resulting from the European directive on Markets in Financial Instruments – MIFiD), LIAM may be required, depending on the type of products it offers and the classification it assigns you, to verify the suitability or appropriateness of the financial instruments in relation to your hedging or investment objectives, your knowledge and your experience.

Without prejudice to the legal or regulatory obligations borne by LIAM, investors should, before investing in the product or concluding any transaction relating thereto, conduct their own analysis of the product and its risks, especially in respect of legal, tax and accounting aspects, without relying solely on information provided to them. Investors should consult, if they deem it necessary, their own advisors or any other professional on this matter. Subject to compliance with its legal and regulatory requirements, LIAM shall not be held liable for the financial consequences of any nature whatsoever arising from any transaction relating to the product or any investment in the product.

Any online application for subscription to a product or service offered by LIAM is only valid after acceptance by it, and involves the submission of the transaction to contractual and tariff conditions, as well as to French law.

Intellectual property

The entire website is covered by French and international copyright, trademark and, more generally, intellectual property law, both in terms of its form (choice, plan, layout of materials, means of access to data, organization of data, etc.), and in respect of each element of its content (text, images, etc.). The content appearing on the pages of this website is the exclusive property of LIAM. You further undertake not to use such content and not to allow anyone else to use this content for illegal purposes.

Exceptionally, some content (text, images) may be the property of its respective authors.

Any reproduction, distribution or redistribution in whole or in part of the content of this website in any form or by any means whatsoever (including by caching or framing), or any sale, resale, retransmission or distribution to third parties in any way whatsoever is prohibited. Failure to comply with this prohibition constitutes an infringement that may result in civil and criminal penalties.

The hypertext links to other websites do not engage the liability of LIAM, particularly as regards the content of these websites.

LIAM is not responsible for hypertext links pointing to this website, and prohibits any person from establishing such a link without its express consent.

Marketing Restrictions and Implications

Lyxor UCITS compliant Exchange Traded Funds (Lyxor UCITS ETFs) referred to on this website are open ended mutual investment funds (i) established under the French law and approved by the Autorité des Marchés Financiers (the French Financial Markets Authority), or (ii) established under the Luxembourg law and approved by the Commission de Surveillance du Secteur Financier (the Luxembourg Financial Supervisory Committee). Most, if not all, of the protections provided by theUK regulatory system generally and for UK authorised funds do not apply to these exchange traded funds (ETFs). In particular, investors should note that holdings in this product will not be covered by the provisions of the Financial Services Compensation Scheme, or by any similar scheme in France.

Index Replication Process

Lyxor UCITS ETFs follow both physical and synthetic index replication process.

Tax

Any fund prospectus and supplements are available at www.lyxoretf.co.uk. Information given about the past performance of the funds is no guarantee of future performance. No investment decision should be taken without reading the fund prospectus and the key information document available of the fund concerned.

Although the content of the website is based upon information that Lyxor UK consider reliable or comes from sources that Lyxor UK consider reliable, Lyxor UK has not verified such information. Lyxor UK make no representation or warranty as to the accuracy, completeness or adequacy of any information. Any reproduction, disclosure or dissemination of the materials available on the website is prohibited.

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IMPORTANT INFORMATION

Any third-party advertising, information and referral buttons containing hyperlinks are not recommendations or endorsements by Lyxor UK or its respective directors, affiliates or employees. The user is referred to the relevant third party for all relevant information, including complete information on that entitys investment adviser or dealer licensing status (if applicable).

All reasonable care has been taken by Lyxor UK to ensure that all statements of fact and opinion contained in the materials provided by a third party are fair, clear and not misleading. Nevertheless, Lyxor UK makes no representation or warranty regarding the accuracy of any third party information and is not responsible for third party content in any way.

UK residents only. This site is intended for Professional Clients who intend to trade in Lyxor UK Exchange Traded Funds in the United Kingdom. It is not provided to any person who is a resident of any other country.

You should note that holdings in this product will not be covered by the provisions of the Financial Services Compensation Scheme, or by any similar scheme. In particular, the investments can be neither offered nor transferred in the United States.

No investment advice Nothing in this website constitutes advice on the merits of buying, or selling a particular investment or exercising any right conferred by the products described. Lyxor UK does not offer investment advice in respect of these products. Unless you are an institutional or professional investor, you should seek independent financial advice in relation to the products contained in this website.

Accuracy and reliability of information The information in this website is, to Lyxor UKs knowledge, reliable and accurate but this cannot be guaranteed. The views of Lyxor UK reflected in this website may change without notice. Figures included in this website take no account of personal tax liability.

No investment decision should be taken without reading the Legal Documents relating to the particular Exchange Traded Fund concerned. A copy of the Legal Documents may be obtained from Lyxor UK at SG House, 1 Bank Street, Canary Wharf, London, E14 4SG upon request.

Disclosure of interest Lyxor UK or its associates may from time to time have a position, or material interest in the products described in this website or the investments underlying them.

Generally Lyxor UK will be the only market maker in the Exchange Traded Funds discussed and will or may have provided significant advice in relation to the Exchange Traded Funds and the investments underlying them.

This is the privacy and cookies policy for the Lyxor ETF website, which is operated by Lyxor Asset Management UK LLP (Lyxor UK).

Collection of your information

Lyxor UK may obtain personal information about you during the course of your participation with the Lyxor ETF website, sometimes through the use of on-line or off-line forms.

Use of your information

The information you voluntarily provide us through this website or email (which may include your name, company, address and contact details such as your telephone number, email address or fax number) will be used for the following purposes:

to send you information and updates about products on the Lyxor ETF website;
to satisfy your requests, such as publications or information relating to Lyxor ETF;
to respond to your query if you have emailed us with an enquiry (for example, in relation to any Lyxor ETF or a forthcoming publication or event);
to send you further information and marketing materials about our services, products, publications, events or keep you informed through our periodic newsletters provided that you have indicated that you are happy to be contacted for these purposes.

Who do we share your information with?

We may (to the extent necessary) pass your personal information to members of the Societe Generale Group and Lyxor UK’s partners, providers, and subcontractors (for whom we remain responsible in this regard) who assist us in providing the services we offer, such as fulfilling requests for information, receiving and sending communications, updating marketing lists, analysing data, providing support services or in other tasks from time to time. Our agents and contractors will only use your information to the extent necessary to perform their functions.

In the event that we undergo re-organisation or are sold to a third party, you agree that any personal information we hold about you may be transferred to that re-organised entity or third party.

We may disclose personal information about you if required to do so by law enforcement or other government or regulatory bodies and their officials or to third parties in connection with an investigation of fraud, intellectual property infringement, breach of any law or other activity that is illegal or which may expose us to legal liability, or in order to protect our rights and property.

International Transfers

Your personal data may be processed by staff operating outside the European Economic Area ("EEA") or your local jurisdiction who work for us or for one of our suppliers chosen for their expertise in certain areas. This may, for example, happen if one or more of our servers are from time to time located in a country outside the EEA or one of our service providers is located in a country outside the EEA. If we transfer your information outside the EEA in this way, we will take steps to ensure that your privacy rights continue to be protected

What are Cookies and how are they used?

This policy explains how our website uses Cookies. It forms part of the important information and the terms and conditions of our website.

A cookie is a small file, typically of letters and numbers, downloaded on to a device when the user accesses certain websites. Cookies allow this website to recognise your computer throughout your session.

The Lyxor ETF website uses a combination of the types of cookies listed below:

What cookies do we use?	What is the purpose of the Cookie?	What is the shelf life?
JSESSIONID	These cookies are used to customise the visitor experience and save the user preferences by linking it to the website account.	Session
_ga	This cookie name is asssociated with Google Universal Analytics - which is a significant update to Google's more commonly used analytics service. This cookie is used to distinguishes unique users by assigning a randomly generated number as a client identifier.	2 Years
_gat	This cookie name is associated with Google Universal Analytics, according to documentation it is used to throttle the request rate - limiting the collection of data on high traffic sites.	10 minutes
disclaimerinstit	These cookies are used to remember if the visitor has accepted the disclaimer for institutional profile	1 Month

How do I set my cookie preferences?

Most web browsers allow some control of most cookies through the browser settings.

You may also delete and block all cookies from the Lyxor ETF Website but parts of the Lyxor ETF website may not work.

To find out more about cookies, including how to see what cookies have been set and how to manage and delete them, visit www.aboutcookies.org or www.allaboutcookies.org.

Other websites

The Lyxor ETF website may, from time to time, contain links to and from the websites of our partners, advertisers or other websites providing relevant information. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

Your rights of access and rights to modify your personal information

You have the right to ask for a copy of the personal information we hold about you in our records by writing to Lyxor ETF, SG House, 1 Bank Street, Canary Wharf, London, E14 4SG. Alternatively, you can email info@lyxoretf.co.uk.

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17 May 2021

Financing the future: how bond markets can help build a better world

The businesses you choose to invest in today will build the world we all live in tomorrow. Help create the future you want for those you advise, and those you love.

Climate change. Corporate scandal. Changing public attitudes. Investors today must grapple with a unique mix of challenges – ones that make climate action, good corporate governance, and social responsibility more important than ever in their portfolios.

That’s why environmental, social and governance (ESG) investing has become so important in recent years. For investors of all sizes, ESG increasingly holds the key to managing risks and making better long-term investment decisions. The greatest challenge investors face today is how to incorporate these three letters into their investment process.

For much of its history, ESG was the domain of equity investors. ESG research within fixed income didn’t receive the same level of attention. But more recently, the research has been moving at a blistering pace – and the supportive data has finally caught up.

Today there’s a €100trn opportunity¹ for investors, big and small, to unleash the transformative power of fixed income and change the world for the better. In this blog, we’re going to examine this opportunity, and demonstrate two ways to approach it.

Bonds are powerful tools for change

Exciting stories about big-name companies keep us tuned in to podcasts and visiting news sites. But the bond market, less discussed outside of the financial press, is arguably more important than its more newsworthy peer given its larger size (by market value).

Millions of investors use bonds to diversify their risk and reduce volatility. They are a central part of governmental and corporate funding – not to mention the bread-and-butter investment for some of the world’s biggest asset managers, such as pension funds and insurers.

There is a huge amount of money in the bond market. More than 25x the entire yearly US Federal Budget, in fact¹. That money has transformative power – power which, if unlocked, would undoubtedly improve the world we live in. Policymakers recognise this potential. That’s why policies and regulation have been changing to encourage a major shift towards responsible investments.

For example, the EU Action Plan was created to build a sustainable future for Europe, the Sustainable Finance Disclosure Regulation (SFDR) was rolled out to tackle the “greenwashing” of financial products, and Article 173 in France requires institutional investors to better report ESG and climate-related considerations in their investment process.

If these initiatives successfully shift the huge pools of money into highly ESG-rated, climate-friendly companies, we expect ‘ESG leaders’ to see their cost of financing go down, enabling them to do more good work and grow. The climate-polluting, poorly-governed ‘ESG laggards’ will get less money from investors, increasing their cost of funding and encouraging them to change their behaviour. A virtuous circle should be the result.

A shift of this scale could radically improve the world we live in. Investors will earn their returns with a clear conscience, knowing they are helping to build a world fit for future generations. Best of all, any investor can join this movement and play a part in securing the safety of our planet.

Changing our unsustainable path

There’s no doubt that companies, governments, and even whole societies today are squaring up to a host of urgent environmental, social and governance challenges.

The most obvious of them is the ‘E’ of the environment. The threat of global warming demands an immediate revolution to reduce carbon emissions, and investors increasingly recognise their responsibility to fight climate change by ‘shifting the trillions’ into climate-friendly companies and investments. Furthermore, governments’ regulations to address climate change will have a negative impact on operational costs and demand for carbon-intensive products such as fossil fuel-based energy production or coal mining.

But ESG is about more than the environment. It ties together different factors to give an overall picture of sustainability and societal impact. Companies must better manage their carbon emissions, resource consumption, and waste production. Investors increasingly recognise that they should also commit to eliminating exploitative practices, such as child labour and modern slavery, in their business and supply chain. They should manage their relationships constructively with local communities wherever they operate, promote diversity and support health and safety. These beliefs find their place in the ‘S’ of social issues, which left unaddressed can impact credit worthiness.

Then there is the ‘G’ of corporate governance – how companies manage themselves. If a company governs itself poorly, there can be a disastrous impact on their reputation, performance, and stock price. Look no further than the Wirecard or Wells Fargo scandals for evidence. Whether it’s executive pay, bribery and corruption, fraud, director independence, board diversity, or tax structure, ‘G’ factors are a key consideration for responsible investing, and they can have strong links to credit strength.

As we’ve seen, until recently, investors were only really able to address these issues with their equity allocations. But that is all changing.

Make a difference with your bond investments

There’s a useful shorthand for ‘bonds that make a difference’: sustainable bonds. This term includes several approaches to fixed income investing that can contribute to positive ESG or climate outcomes.

As an ETF provider, we offer two main routes to responsible bond investing that align with the tenets of rules-based indexing – transparency, diversification and liquidity.

ESG bonds start with a mainstream corporate bond benchmark used by investors worldwide and already invested with billions of euros – known as the “parent index”. Then, a sustainability screen is applied which takes into account environmental, social, and governance standards. This screen (or filter) excludes any bonds issued by companies with poor ESG ratings, or who are subject to very severe scandals, or involved in controversial business such as weapons, tobacco, thermal coal and unconventional oil and gas, to name just a few. The result? A “best in class” selection of bonds issued by companies who have proven their ESG credentials.

Green bonds take a different approach. The proceeds of green bonds are certified as going purely towards eco-friendly projects. Green bond investors therefore have a keen interest in how the money raised by that bond will be used. It’s worth highlighting that all kinds of companies can issue green bonds to finance their own low-carbon transition, from tech companies, to financial institutions, to automakers. Through this ‘use of proceeds’ rule, investors in green bonds can take comfort in knowing they are financing truly ‘green’ activities. We will look into how this works in practice in more detail in a future blog.

Now let’s examine how you could use them in a portfolio.

1. ESG corporate bonds

Traditional investment grade or high yield corporate bonds with an ESG filter
Core allocation that excludes poorly-rated companies on E, S and G factors
Potential to reduce risk without creating major biases or performance disconnects from the parent index

Verdict: ESG corporate bonds can be slotted into a portfolio exactly where traditional non-ESG bonds are now. For many investors, that makes credit screened by “best in class” issuers the natural choice to start integrating ESG factors into the investment process. Our research indicates that the extra ESG screen has the potential to improve risk-adjusted returns while being very asset-allocation friendly, as an existing core credit holding can be switched practically like-for-like.

We chose Bloomberg Barclays, a well-known leader in fixed income benchmarks, as the index provider for our sustainable corporate bond range. Furthermore, the ESG screen in our chosen indices harnesses data from MSCI, a global leader in ESG research. Together we believe these two data powerhouses are an ideal match for getting a dependable and sustainable exposure to investment grade and high yield bond markets. Our ESG credit ETFs are also compliant with Article 8 of the EU’s SFDR as they promote environmental or social characteristics.

2. Green bonds

Make an impact as bond proceeds are guaranteed to be used in pro-climate projects across numerous sectors
Retain the same characteristics as traditional bonds from the same issuer, such as credit rating
‘Use of proceeds’ rule is vetted by the independent Climate Bonds Initiative (CBI), a leader in green bond research

Verdict: Green bonds are a powerful approach to make a direct climate impact within a bond allocation. The ‘use of proceeds’ rule sounds simple, yet it has transformative power to build a better world by mobilising finance towards impactful green projects and assets, the eligibility of which is determined by a strict taxonomy defined by the CBI. To illustrate: in Lyxor’s flagship Green Bond ETF launched in 2017, last year’s three most popular uses for its proceeds were Energy, Green Buildings, and Clean Transport – three crucial components for a more sustainable future.

Our green bond ETF was the first of its kind in the world, and has grown to over €500m in assets. In 2019, it was awarded the Greenfin label, a certification for private investments in a green economy introduced by the French government. Our green bond ETFs are also compliant with Article 9 of the EU’s SFDR as they have a specific sustainable investment objective.

We have more capital available on the planet now than ever before in history. And large slabs of it are in negative or zero interest rate yields. (...) We need to shift that capital into places where it can get some kind of return.And that's going to be green.
Sean Kidney. CEO of the Climate Bonds Initiative

We have the tools – now we must use them

It’s time to be on the right side of change. The day is coming when a company’s fortunes will depend as much on the size of its carbon footprint, the global warming scenario it implies, and its willingness to address broader societal issues, as its ordinary financial metrics.

Whether you want to improve performance, reduce risk, or just invest with a clear conscience, the tremendous advances in ESG data now allow you to do so much more with your bond allocation.

Canadian ice-hockey legend Wayne Gretzky was once asked the secret to his success. He replied: “I skate to where the puck is going to be, not where it has been.” The best investment decisions look to the future. There has never been a better opportunity to skate to where the puck is going – to finance the future with sustainable bonds, get ahead of the curve, and help build a better world.

In the coming weeks, we will take a closer look at these two ways to finance a better future with bonds. If this is a topic that interests you, stay tuned for more.

Our ESG credit ETFs at a glance

Our green bond ETF range at a glance

Did you know?

Most of our ETFs now come with a temperature score, helping you understand the implied temperature rise of your investments, and helping you build a portfolio compatible with a low-warming future for the planet.

To learn more, head to our new COtool, where you can find temperature scores for those equity and corporate bond ETFs for which the data on the underlying indices is sufficient to reliably assign such scores.

This article is for informative purposes only, and should not be taken as investment advice. Lyxor ETF does not in any way endorse or promote the companies mentioned in this article. Capital at risk. Please read our Risk Warning below.

¹Global bond market approximately $128trn (ICMA, 2020), 2020 US Federal Budget $4.76trn

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Conflicts of interest

This research contains the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to (i) ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees.

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