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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.  

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 CLIENTS IN FINLAND WHO QUALIFY AS PROFESSIONAL CLIENTS OR PROFESSIONAL INVESTORS

This website is published by Lyxor International Asset Management (LIAM), a French asset management company approved by the French Financial Markets Authority (Autorité des Marchés Financiers, 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 on Microsoft Azure servers.

This website is subject to French and Finnish law.

 

A professional client for the purposes of the MiFID (2004/39/EC) and the AIFMD (2011/31/EU) as implemented in Finland 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:

·            an investment firm, a credit institution, a fund management company, an alternative investment fund manager, a depositary;

·            a stock exchange, an options exchange, a clearing entity;

·            a central securities depository;

·            an insurance company, a pension insurance company, a pension fund;

·            an entity that deals exclusively on own account in financial derivatives for the sole purpose of hedging positions on derivatives markets or deals for the account of other members of those markets or makes prices for them and is guaranteed by clearing members of the same markets;

·            a business entity dealing in commodities and/or commodity derivatives on own account;

·            any other institutional investor;

 

 

-          a large undertaking, meeting two of the following size requirements according to the financial statements of the last preceding financial period:

 

·            balance sheet total of at least EUR 20,000,000

·            net turnover of at least EUR 40,000,000

·            own funds of at least EUR 2,000,000

 

-         the State of Finland, the State Treasury, the province of Åland, foreign national and regional governments as well as foreign public bodies managing public debt;

-         the European Central Bank, the Bank of Finland and similar foreign central banks as well as the International Monetary Fund, the World Bank and similar international associations and organisations;

-         institutional investors that, as their main field of activity, invest in financial instruments;

-         other clients that have in writing requested to be treated as a professional client and, after having received written information on the limited protection afforded to professional clients confirmed in writing their understanding of the same, provided that the investment firm has assessed that the client is capable of making independent investment decisions and understands the related risks and, furthermore, that the client meets at least two of the following criteria:

·            the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

·            the size of the client’s financial instrument portfolio exceeds EUR 500,000;

·            the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

 

A professional investor for the purposes of the UCITS (2009/65/EC) as implemented in Finland is one of the following:

-         an entity required to be authorised or regulated to operate in the financial markets, as defined above under ‘professional client’;

-         a large undertaking, meeting the requirements set out above for professional clients

-         the State of Finland, the State Treasury, the province of Åland, foreign national and regional governments as well as foreign public bodies managing public debt;

-         the European Central Bank, the Bank of Finland and similar foreign central banks as well as the International Monetary Fund, the World Bank and similar international associations and organisations;

-         institutional investors that, as their main field of activity, invest in financial instruments;

-         other investors that have notified the fund management company, UCITS or its representative in writing that they, on the basis of their expertise and experience in investing activities, are professional investors, and meet at least two of the following criteria:

·            the investor has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

·            the size of the investor’s financial instrument portfolio exceeds EUR 500,000;

·            the investor works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

 

The above definitions are only extracts and are as such not exhaustive. For further details please refer to the Finnish Investment Services Act (747/2012) and the Finnish Investment Funds Act (48/1999).

 

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 French law and approved by the Autorité des Marchés Financiers (the French Financial Markets Authority), or (ii) established under 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 Finnish regulatory system generally and for funds authorised in Finland 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 the Finnish Investors’ Compensation Fund.

 

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”), the Finnish Investors’ Compensation Fund 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.fi. 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 makes 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 confirm that you qualify as a ‘professional client’ or ‘professional investor’, as set out above and 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 otherwise authorised to receive the information to and on this website.

 

 

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Making America ​wait?

 

 

Alternative facts, illegal travel bans and the mother of all bombs...it’s been a frenetic first 100 days for Donald Trump. No one could accuse him of taking it easy, having signed 15 executive orders and 13 presidential memoranda soon after his inauguration. 

His campaign however was built on the promise of policies that would “make America great again”, several of which are yet to materialise. In fact, he’s been making America wait. It hasn’t troubled the markets too much though. So what should we make of his first 100 days, and what’s next?

 

Putting America first

Trump’s intent to “put America first” led to his withdrawal from the Trans-Pacific Partnership trade agreement, his desire to renegotiate the North American Free Trade Agreement and his consideration of new tariffs and changes to border taxes.

He’s also been trying to cut immigration, notably through his heavily criticised (and revised) travel ban. Details about his much-trumpeted wall along the border with Mexico remain scant.

This side of Trump’s re-industrialization program was the most controversial and ferad by markets. Tighter entry rules could have a detrimental effect on growth. And the OECD estimates that a 10% rise in the cost of trade could cut global GDP by around 1% per year. 

What’s more, protectionism and border controls could spur inflation, prompting monetary authorities to tighten policy at the expense of growth.

Style over substance?

$1 trillion of infrastructure spending was a key pledge, but details are notable by their absence so far. US infrastructure is creaking ever more loudly, but doubts are increasing whether this spending will ever materialise. 

 

US infrastructure is ageing rapidly


Source: Lyxor Cross Asset Research, Macrobond. Data as at 01/01/2015.

Reducing the state’s role in the economy by cutting taxes and red tape should support growth. Last week’s announcement of “the biggest tax cut in US history” came with plenty of hyperbole but little clarity on how it would all be paid for. The Treasury Secretary repeatedly stated these reforms would “pay for themselves” through increased economic growth, but the market’s reaction was subdued. Getting any plan that leads to a big increase in the budget deficit through Congress won’t be easy.

However a meaningful economic package could be passed this summer. The positive effects of this fiscal push will however mainly be felt next year. There may then be a soft patch in 2019 as trade restrictions and monetary tightening start weighing on growth. 

 

Buyers beware

The US stock market has surged in the 100 days since the inauguration. The S&P 500 has gained around 5% over this period, an increase well ahead of the average for a new Republican president. But the rally was mainly driven by multiple expansion, rather than earnings growth. US equities have looked expensive to us for some time, and they’re only looking more expensive now. In fact, if you ignore the tech bubble, they are trading at historic highs. 

 

Will earnings rise?

Earnings prospects have to improve for these valuations to be sustained. A lot depends on the exact nature of the economic package. The eventual repatriation of American companies’ foreign earnings could provide a boost to earnings per share.

The upcoming tax bill is likely to have the biggest impact. If the legislation is passed in full, and is applied retrospectively, it could help US companies’ 2017 earnings increase by around 11%. Depending on the timing and extent of the tax haul, the effect it could have on 2017 EPS could be from -1% to 9%. That’s well below consensus estimates of 18% growth.

Markets might be too optimistic about US companies’ prospects, even though they are still being supported by the Fed’s dovish stance. That’s not to say valuations won’t inflate even further before earnings downgrades kick in - they haven’t yet reached the overbought territory usually associated with an imminent fall. 

 

US equity markets today

We’re staying invested until monetary and technical backdrops worsen, but we are leaning towards more defensive strategies, like minimum variance indices. For now:

 

Growth stocks look a better option than value 

Minimum-variance strategies could protect against short-term volatility

The tax bill is likely to favour domestic-oriented US firms rather than large multinationals

Small caps look especially expensive

Banks should be beneficiaries of deregulation over the long term, but look a little vulnerable right now

Healthcare providers are trading at undemanding valuations and could offer attractive dividendsREITs might be a useful tactical option depending on the political backdrop and the exact features of the tax legislation

We still like technology and biopharmaceuticals because they have lots of foreign earnings to repatriate, which could lead to sizeable share buybacks and M&A opportunities

All data Lyxor Cross Asset Research team, April 2017.  All opinions expressed are as at 28 April 2017.  Past performance is no guide to future returns. 

This communication is for professional clients only.
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 2004/39/EC. 

This document is of a commercial nature and not of a regulatory nature. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor International Asset Management or any of their respective affiliates or subsidiaries to purchase or sell the product referred to herein.

We recommend to investors who wish to obtain further information on their tax status that they seek assistance from their tax advisor. The attention of the investor is drawn to the fact that the net asset value stated in this document (as the case may be) cannot be used as a basis for subscriptions and/or redemptions. The market information displayed in this document is based on data at a given moment and may change from time to time. The figures relating to past performances refer or relate to past periods and are not a reliable indicator of future results. This also applies to historical market data. The potential return may be reduced by the effect of commissions, fees, taxes or other charges borne by the investor. 

Lyxor International Asset Management (Lyxor ETF), 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 and the AIFM Directive (2011/31/EU). Lyxor ETF is represented in the UK by Lyxor Asset Management UK LLP, which is authorised and regulated by the Financial Conduct Authority in the UK under Registration Number 435658.