Change Country
Welcome to Norway
Please read the important information below before continuing to our website

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

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 NORWAY

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 Norwegian law.

 

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 )

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, , of the protections provided by the Danish regulatory system generally and for funds authorised in Denmark do not apply to these exchange traded funds (ETFs).

 

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.dk. 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.

 

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.

August, 2015

 

 

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.

By continuing to browse the site, you are agree on the use of cookies to track the number of visits.To know more about cookies policy:click here

What rising inflation means for your US investments


After a number of years in which central banks were more concerned with fighting the risks of deflation, several signs point to a higher inflation environment in the US. Over the last 12 months, oil prices have shot up by almost 30%. The US economy is now at "full" employment, with businesses reporting a shortage of skilled workers and an unemployment rate below 5%. Wage growth - initially sluggish - has also started to pick up in recent months, albeit without inducing major wage gains as yet.  According to OECD estimates, growth should remain above potential this year with the usage of industrial production capacity currently running at close to 80%. We believe such pressures in the productive apparatus will eventually translate into higher consumer prices.

Some of these effects are already apparent. For the first time in almost a year, headline inflation (CPI) and core inflation (which excludes volatile components such as energy prices) printed above the Fed’s 2.0% target in March. Higher inflation could well propel the push for higher speed policy normalisation. According to the March FOMC Minutes, Fed officials have grown more confident in the inflation outlook, barring the realisation of downside risks to their projections. Strong inflation reports in March and April should keep the Fed on track for a 25 basis points rate hike in June - and enable it to deliver four in total this year. However, we do not believe that the inflation rate will ramp up too dramatically in the period ahead. Technological developments in areas such as healthcare or communications, unconventional petroleum production and greater investment in productive capacities are factors that could counter at least some of the inflationary pressures.


US headline and core inflation both ahead of the Fed’s 2% target in March

                     chart 1 Us headline

Source: Lyxor International AM, Reuters Eikon Analytics.  Data as at 31 March 2018

Asset selection becomes more complicated

Despite the relatively benign nature of the above, investors are concerned by other issues. Asset allocation has become more complex given greater political risk (like the possible trade war between the US and China, less support from central banks and the high valuations most traditional asset classes are displaying. As a result, we expect to see a volatility regime shift, with markets much more volatile than they have been in recent years. Some of the market moves we’ve seen in February and March were, in our view, the precursors for this period of instability.

The positive correlation between the returns of fixed income and equity assets also impedes efforts to diversify portfolios more effectively. Historically, an investor who adopts a more cautious position tends to reduce their exposure to equities and increase their weighting to fixed income. That may not however be wise in a rising inflation environment where greater caution is required on conventional bonds. Inflation-linked bonds may be better suited to this new normal.


Right place, right time

Our research shows assets related to inflation tend to perform well in the more advanced stages of the economic cycle. The expansion in the US is undoubtedly entering old age - so the probability of a recession in the next two years is increasing. 

Holding commodities, most notably petroleum products, tends to prove beneficial in advanced stages of the cycle (especially 12 months before a recession), both in terms of absolute and risk-adjusted returns. The analysis takes into account economic cycles in the US, as measured by the NBER, since 1970. Inflation breakevens have been fairly supported by the recent move in energy/ oil prices (Brent above $72/bbl on 17 April). Net flows into short -dated TIPS ETFs have been fairly robust over the past month (despite net outflows in March in all-maturities ETFs). While energy price moves are difficult to predict in the near-term, the possibility of weather-related or geopolitically induced spike in oil prices remains. They should nonetheless continue to underpin perceptions of higher inflation. Inflation prints, on the other hand will continue to benefit from positive base effects (temporary slowdown in telecommunications and airfares in 2017) ahead of the summer. 

Key calls

For now then, we are looking to overweight assets such as TIPs and inflation breakevens, as well as commodities and those equity sectors that are most sensitive to inflation expectations.

In equities, as we said last week, Energy stocks offer a good proxy to oil prices and US inflation breakevens. The global energy sector offers an attractive dividend yield of around 3.75% (i.e. positive carry) vs. the negative carry of investing in futures-based strategies. The latter underperform when the futures curve is in contango (futures price above the expected spot price) - which is typically the case with Oil. Financials also remain a pure cheap way to play global reflation.

Whether you choose TIPs or breakevens depends on your view on where inflation goes next. TIPs are the conventional choice, but breakevens may be a better play if you believe people are underestimating just how high inflation could climb.

Energy stocks: a good proxy to US inflation breakevens

                        Chart 2 Energy stocks

Source: Lyxor International AM, MSCI, Bloomberg. Data as at 31 March 2018 

Why Lyxor for inflation

Lyxor has the most far reaching and complete range of inflation-linked ETFs in Europe, with exposures covering the US, Europe and the UK. Our Core US TIPS ETF is the cheapest on the market at just 0.09%. If you’re looking to not only protect yourself against rising inflation but also rising rates, our unique inflation expectations ETFs are designed to tackle both. With over 12 years’ experience managing inflation-related ETFs, and €3.3bn in AuM, look no further for dependable solutions to rising inflation.

Other ways to ride the inflation wave include investing in commodities, or targeting certain sectors. Our broad commodities ETF launched in 2006 tracks the Thomson Reuters/CRB index, a reference benchmark with over 50 years’ track record. It was the most widely traded broad commodities ETF in Europe over the past 5 years. We also offer 10 ways to access global equity sectors, with some of the oldest and largest ETFs of their kind in Europe.

Risk Warning

THIS COMMUNICATION IS FOR ELIGIBLE COUNTERPARTIES OR PROFESSIONAL CLIENTS ONLY

Fund and charge data: Lyxor ETF, correct as at  20 April  2018.

This document is for the exclusive use of investors acting on their own account and categorized either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets in Financial Instruments Directive 2004/39/EC. These products comply with the UCITS Directive (2009/65/EC). Société Générale and Lyxor International Asset Management (LIAM) recommend that investors read carefully the “investment risks” section of the product’s documentation (prospectus and KIID). The prospectus and KIID are available free of charge on www.lyxoretf.com, and upon request to client-services-etf@lyxor.com.

The products mentioned are the object of market-making contracts, the purpose of which is to ensure the liquidity of the products on the London Stock Exchange, assuming normal market conditions and normally functioning computer systems. Units of a specific UCITS ETF managed by an asset manager and purchased on the secondary market cannot usually be sold directly back to the asset manager itself. Investors must buy and sell units on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units and may receive less than the current net asset value when selling them. Updated composition of the product’s investment portfolio is available on www.lyxoretf.com. In addition, the indicative net asset value is published on the Reuters and Bloomberg pages of the product, and might also be mentioned on the websites of the stock exchanges where the product is listed.

Prior to investing in the product, investors should seek independent financial, tax, accounting and legal advice. It is each investor’s responsibility to ascertain that it is authorised to subscribe, or invest into this product. This document is of a commercial nature and not of a regulatory nature. This material is of a commercial nature and not a regulatory nature. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor Asset Management (together with its affiliates, Lyxor AM) or any of their respective subsidiaries to purchase or sell the product referred to herein.

Lyxor International Asset Management (LIAM), société par actions simplifiée having its registered office at Tours Société Générale, 17 cours Valmy, 92800 Puteaux (France), 418 862 215 RCS Nanterre, is authorized and regulated by the Autorité des Marchés Financiers (AMF) under the UCITS Directive (2009/65/EU) and the AIFM Directive (2011/31/EU). LIAM is represented in the UK by Lyxor Asset Management UK LLP, which is authorized and regulated by the Financial Conduct Authority in the UK under Registration Number 435658. Société Générale is a French credit institution (bank) authorised by the Autorité de contrôle prudentiel et de résolution (the French Prudential Control Authority).

Research disclaimer

Lyxor International Asset Management (“LIAM”) or its employees may have or maintain business relationships with companies covered in its research reports. As a result, investors should be aware that LIAM and its employees may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please see appendix at the end of this report for the analyst(s) certification(s), important disclosures and disclaimers. Alternatively, visit our global research disclosure website www.lyxoretf.com/compliance.

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.

Connect with us on linkedin