UBS AM Lists New Short-Term Development Bank Bond ETF on LSE

UBS AM has listed a new fixed-income ETF on the London Stock Exchange. The UBS Sustainable Development Bank Bonds 1-5 UCITS ETF (USD) acc began trading today.

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By ETFWorld.co.uk

André Mueller, Head of Client Coverage at UBS Asset Management

UBS has listed a new fixed-income ETF on the London Stock Exchange. The UBS Sustainable Development Bank Bonds 1-5 UCITS ETF (USD) acc began trading today.

The fund provides targeted exposure to short-term bonds issued by multilateral development banks. It tracks the Solactive Global Multilateral Development Bank Bond USD 25% Issuer Capped 1-5 Index (Total Return). This index is composed of USD-denominated bonds from entities like the World Bank or the Asian Development Bank, with all maturities between one and five years. The 25% issuer cap limits exposure to any single bank.

The ETF is passively managed using a stratified sampling strategy. This means it invests in a representative selection of index components to replicate its performance. The fund may use derivatives and can hold assets outside the index if the portfolio manager deems it necessary to meet the investment objective.

A core feature is its sustainable investment objective, aligning with the labelled bond market. The fund will not engage in securities lending. Income from the bonds is reinvested, reflecting the ‘acc’ (accumulating) share class designation.

For investors, this ETF offers a single point of access to a specific segment of the sustainable bond market. It emphasises transparency and cost efficiency, typical of passive strategies. The short duration of the portfolio may appeal to those seeking lower interest rate sensitivity compared to broader bond funds.

The fund is UCITS compliant, providing standard regulatory protections for European investors. Its total expense ratio (TER) was not specified in the launch documentation and should be confirmed by investors. The main competitor in this space is the iShares USD Ultrashort Bond UCITS ETF, which has a different index composition and credit profile.

Source: ETFWorld