The currency-hedged share class of the ETFS Lombard Odier IM Global Corporate Bond Fundamental GO UCITS ETF has been listed on the London Stock Exchange.

Lombard Odier Investment Managers and ETF Securities have together launched a pound sterling-hedged version of their global corporate bond exchange-traded fund.

The ETFS Lombard Odier IM Global Corporate Bond Fundamental GO UCITS ETF (GBP Hedged Distributing ETF), available on the London Stock Exchange, aims to protect investors against the impact of adverse currency movements while boosting exposure to foreign assets.

“By using a hedged share class, an investor is safeguarded from a divergence in performance between the index returns in its local currency and the returns of a non-hedged ETF product that is listed in a different currency,” said Kevin Corrigan, head of fundamental fixed income at Lombard Odier IM.

Lombard Odier IM and ETF Securities established a partnership in March last year. Since then, they have listed five UCITS-compliant fundamental fixed income ETFs across Europe, including the global corporate bond fund. 

They all track a fundamentally-weighted index based on the notion that bond investors should consider a borrower’s capacity to repay their debts rather than their capacity to borrow more. The index therefore looks at fundamental factors, including each sector’s contribution to the economy as well as each issuer’s revenues, level of indebtedness, cash flow and asset quality.

“With increased currency volatility in 2015 that’s likely to continue this year, portfolio managers have become keenly aware of the impact of foreign exchange movements in their portfolios,” said Howie Li, co-head of CANVAS, the exchange-traded product provider, at ETF Securities.

“This latest development in our range of smart beta fixed income ETFs is in response to the investment community’s need to manage their currency risk. ETPs are proving a popular choice for currency and currency-hedged investments.”