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

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THIS WEBSITE IS AIMED AT PROFESSIONAL CLIENTS IN THE UK

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

 

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This website is subject to French law and English 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 )

 

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 FCA Handbook: https://www.handbook.fca.org.uk/handbook/glossary/

 

 

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 UK makes no representation or warranty regarding the accuracy af any information. Any reproduction, disclosure or dissemination of these materials is prohibited. This site is maintained by Lyxor UK, SG House, 41 Towar Hill, London EC3N 4SG.

 

 

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 UK 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.

 

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.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 Legal Documents relating to the particuler Exchange Traded Fund concerned. A copy of the Legal Documents may be obtained from Lyxor UK at SG House, 41 Tower Hill, London EC3N 4SG upon request. 

 

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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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.

 

 

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05 Jul 2021

What’s in a label? Informing better decisions and avoiding greenwashing

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S&P Global recently hosted their inaugural flagship Sustainable1 event, ‘Accelerating the Transition to Sustainability’, during which François Millet, Lyxor’s Head of ETF Strategy, ESG & Innovation shared his thoughts in a panel on ESG labels and how they can help avoid greenwashing. Read on for some edited highlights, or watch the full replay.

Panel agenda

  • What are the key considerations in product labelling?
  • What can we learn from the EU Sustainable Finance Disclosure and Taxonomy Regulations?
  • 2nd party opinions and avoiding greenwashing 

Speakers

  • Lauren Smart, Chief Commercial Officer, ESG, S&P Global Sustainable1 (moderator)
  • Victor Van Hoorn, Executive Director, EuroSif
  • François Millet, Head of ETF Strategy, ESG and Innovation, Lyxor
  • Manjit Jus, Managing Director, Global Head of ESG Research & Data, S&P Global

Watch the full replay to learn more about investment labels, or read edited highlights below


Victor Van Hoorn on the state of European sustainability regulation 

Victor: “I think in the last couple of years, the EU and the European Commission has definitely taken a leadership role in this place. (…) That all stems from the post Paris Agreement on climate where it was obvious that we needed to leverage private finance besides public finance if we ever wanted to reach the climate neutrality goals. (…) In Europe there’s really two pieces of legislation that emerged. One was the much talked about EU Taxonomy which tries to come up with a classification system of economic activities that are aligned with the climate goals of climate neutrality. So in a way it seeks to define ‘green’, seeks to establish a harmonised consensus view of what we consider as sustainable enough or ‘green’ enough. (…) That’s complemented by the whole Sustainable Financial Disclosure Regulation, or SFDR, which is fast on track to revolutionise the market. (…) On the one hand it asks fund products that make promises around ESG or sustainable investment to disclose much more on the risk side of the equation, which is “explain to us how your investment portfolio is hedged or able to withstand risks that may be resulting from material ESG factors”. That’s one side. But the novelty I guess here is that it starts to also address the other side of materiality, which is more the impact question, where I think there has been much talk about the so called Principal Adverse Impact Indicators.”

François Millet on the role of labels for investment products

François: “The ETF industry in Europe totals €1.1trn, and out of this, 12% are ESG ETFs (€130bn). But for net new assets it’s a different story – ESG ETFs represent 50% of the new assets gathered in the market, so it’s really a big transformation of the ETF market. What I can say and report is that the Disclosure Regulation which has been highlighted by Victor has been essential. (…) The classification of our products between products which are just promoting ESG characteristics and products which are more actively proposing sustainable investment objectives has been absolutely key. In the ETF space in Europe, less than 5% of the products are so called ‘Article 9’, the most demanding level. (…) We needed it to comply with three different frameworks for our products. The first one is European regulation, including Taxonomy regulation and of course Benchmark regulation for index products and Disclosure regulation (SDFR). The second one is the doctrines of local and domestic regulators who are willing to go further in specifying the constraints. In some countries like France for example we need to demonstrate the materiality of the ESG screening of the products, so the European regulation is not enough to get there. And thirdly, the labels. The labels are initiatives coming from various countries. They are so far domestic, and not only are they country specific, but they are not harmonised around Europe. So we are trying of course to build products, and sometimes we are negotiating with index providers to make sure they are integrating in the methodology of the indexes the criteria so that we are eligible to as many local labels as possible, but also to the European regulation of course.”

Manjit Jus on how companies are adapting to new regulation

Manjit: “I think with regulation coming in Europe on what companies should be disclosing, and frameworks like TCFD offering a bit more guidance on the environmental pieces, that helps frame it. But certainly, a lot of the level of depth, if you really dig into it, will be required to meet the regulators’ needs. On the investors’ side (…) they can be quite in depth, at a very granular level in such a way that companies themselves may not have thought about in the past. (…) I also think this is an opportunity to really connect investors with companies, and bring them together around information that is necessary, because regulators are asking for it, and because hopefully it will drive more consistency and hopefully move the needle forward. I think this has an opportunity to shape the way companies are disclosing certain pieces of information, compared to some of the disaggregation and misalignment we’ve had in the past with different reporting standards that existed for companies that were not necessarily focused on investors.”

The view from Lyxor

Lyxor has been active on the labelling front, with many of our ETFs being either SFDR 8 or 9 compliant, or having received ESG labels. We know sustainability criteria matter to you, and we’re doing everything we can to help avoid ‘greenwashing’.

We’re happy to report that two more ETFs in our ESG range recently received the official SRI Label:

This adds to our growing list of ESG credentials, including the SRI Label for our MSCI Europe ESG Leaders (DR) UCITS ETF and our MSCI EMU ESG Leaders Extra (DR) UCITS ETF, and the Greenfin Label for our flagship Green Bond (DR) UCITS ETF.

Watch this space as we continue with our ESG fund labelling programme throughout 2021 and beyond!

Risk Warning

This document is for the exclusive use of investors acting on their own account and categorised either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets in Financial Instruments Directive 2014/65/EU. 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.

Except for the United-Kingdom, where this communication is issued 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, this communication is issued by Lyxor International Asset Management (LIAM), a French management company authorized by the Autorité des marchés financiers and placed under the regulations of the UCITS (2014/91/EU) and AIFM (2011/61/EU) Directives. Société Générale is a French credit institution (bank) authorised by the Autorité de contrôle prudentiel et de résolution (the French Prudential Control Authority). Lyxor International Asset Management (LIAM) is registered in the public register of the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) as a manager (beheerder) of a UCITS. 

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.

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.

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