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

The Lyxor ETFs on this website may be restricted for certain individuals or in certain countries pursuant to the national regulations applicable to those individuals or countries. It is therefore your responsibility to ensure that you are authorised to invest in the Lyxor ETFs on this website. 

 

If you are an investor in the United Kingdom, please go to www.lyxoretf.co.uk  

If you are an investor in the Netherlands, please go to www.lyxoretf.nl  

If you are an investor in Italy, please go to www.lyxoretf.it  

If you are an investor in Spain, please go to www.lyxoretf.es  

If you are an investor in Austria, please go to www.lyxoretf.at  

If you are an investor in Germany, please go to www.lyxoretf.de   

If you are an investor in Singapore, please go to www.lyxoretf.com.sg  

If you are an investor in Switzerland, please go to www.lyxoretf.ch  

If you are an investor in Belgium, please go to www.lyxoretf.be  

If you are an investor in Poland, please go to www.lyxoretf.pl 

If you are an investor in Norway, please go to www.lyxoretf.no

If you are an investor in Denmark, please go to www.lyxoretf.dk

If you are an investor in Luxembourg, please go to www.lyxoretf.lu

If you are an investor in Sweden, please go to www.lyxoretf.se

If you are an investor in Finland, please go to www.lyxoretf.fi

 

 

The Lyxor ETFs on this website are undertakings for collective investment in transferable securities (UCITS) (i) domiciled in France and approved by the Autorité des Marchés Financiers (AMF) or, (ii) domiciled in Luxembourg, approved by the Commission de Surveillance du Secteur Financier (CSSF) and authorised to market their units or shares in the French Republic in accordance with the notification procedure under Article 93 of Directive 2009/65/EC. Investors should note that the prospectuses of certain Lyxor ETFs under Luxembourg law that have been notified in accordance with this procedure are only available on the website in English. A French translation of these prospectuses can be obtained upon request by sending a letter to Lyxor International Asset Management (“Lyxor”) – 17 Cours Valmy, 92987 Paris La Défense, France.

 

The information on this website is not intended for persons or entities that are resident, located or registered in jurisdictions that are not authorised to distribute Lyxor ETFs. As a result, the information on this website does not constitute an offer or solicitation to buy or sell units or shares in these ETFs by anyone in any jurisdiction:

 

(a)   in which such an offer or solicitation is unauthorised;

(b)   in which Lyxor is not qualified to make such an offer or solicitation; or 

(c)   in which it is unlawful to make such an offer or solicitation.

 

In particular, the Lyxor ETFs on this website are not and will not be registered under the United States Securities Act of 1933, as amended. As such, they may not be offered or sold within the United States of America, except in specific cases where transactions are exempt from registration under the Securities Act. The ETFs listed on this website may not be sold to US citizens or transferred to the United States by any other means, unless this transaction is not subject to any specific registration under US law. 

 

Any person from a jurisdiction to which the above-mentioned restrictions apply should inform themselves of and observe these restrictions.

 

This website is intended for commercial purposes and is not regulatory in nature. Although the information provided has been drawn up on the basis of sources considered to be reliable, there is no guarantee that it is accurate, complete or relevant. Some of the information on this website is provided on the basis of market data collected at a specific time and may therefore vary over time. Lyxor advises investors to read the risk factors section of the prospectus and the key investor information document carefully. These documents can be found on the website.

 

The net asset value (“NAV”) of Lyxor ETFs may at any time be subject to considerable price fluctuations, which in some cases may lead to the loss of all of the capital invested. Investors should note that some ETFs may be sensitive to fluctuations in the exchange rate between their reference currency and that of the underlying index, as well as of the components of the underlying index.

 

Before investing in a Lyxor ETF, you should carry out your own risk analysis of the product from a legal, tax and accounting perspective, rather than basing your decision solely on the information provided. If necessary, you should consult your own advisers or any other qualified professional. 

 

Subject to compliance with the legal obligations by which they are bound, Lyxor or any entity within the same group shall not be held liable for any financial or other consequences of an investment in the product. 

 

 

By clicking on institutional or individual above, I confirm that I have read and understood the information provided herein, and that I am resident or registered in Luxembourg.

 

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
24 May 2019

SG Quality Income: an attractive yield that stands the test of time

The stock markets rose strongly over the first few months of the year, but they’ve been struggling in recent weeks due to a resurgence of the trade war between the US and China. Meanwhile, bond yields are still painfully low. One option for investors to navigate this tricky environment could be to allocate to a quality income equity strategy. 


Difficult conditions for investors seeking income

Global economic conditions have been slowly improving since the start of the year and bond yields have sunk even further, with those of European sovereigns now at rock-bottom levels.  How might multi-asset investors react in these circumstances? They have the choice to switch out of bonds into suitable equities or sit tight. Investors believe that economic conditions aren’t going to improve, and that central banks will make ever-more desperate attempts to drive yields lower, they may decide to carry on holding bonds.

We’re in an environment of low interest rates and low corporate bond yields, and that means there are few safe havens for income seekers. One idea for investors wary of making seismic changes to their asset allocation could be to switch from low-quality bonds into high-quality equities – a change that puts balance sheet strength ahead of anything else.

Why might this be an attractive choice? Taken at face value, the potential income available from high yield bonds looks like it should exceed dividends. But high yield bond indices are made up of the lowest-quality companies in the market, and there’s no guarantee they’ll be able to meet their obligations. These bonds therefore have the potential for a lot more risk with little upside.


 SG Quality Income index: providing an attractive yield that stands the test of time

One option for investors looking to allocate to high-income equities could be the SG Quality Income index. It’s an equity index that seeks to provide a dependable, high-quality dividend stream.  Unlike the MSCI World High Dividend index, which tends to outperform the broad global markets on a total return basis but struggles in return-only terms, the SG Quality Income index focuses on corporates that can pay and grow their dividend and aims to maintain its dividend payments regardless of the market backdrop.

By sticking to the same careful, repeatable process, the SG Quality Income index has been able to avoid more than 80% of the major dividend cuts that have taken place since the global financial crisis in 2007. 

Comparison of realised yields for high- and low-quality companies since 1989

    Chart1

Source: SG Cross Asset Research/Equity Quant, FTSE, Factset. Data as at 30/04/2019. Past performance is not a reliable indicator of future performance. 

In constructing the index, we assess each stock based on three criteria:

  • the quality of its business
  • the strength of its balance sheet
  • the level and sustainability of its dividend yield.

See our handy guide for more information

Chart 2

*Yield thresholds may be relaxed to ensure the index contains a minimum number of stocks. Detailed index methodology available on request.

Some important benefits

The high-quality companies that the SG Quality Income index invests in represent an opportunity to access a less volatile area of the equity market. The nature of these businesses is such that their earnings are predictable rather than cyclical, and this means many investors view them as unfashionable. This can result in these kinds of stocks often becoming undervalued.  An extra benefit is that they represent a useful hedge against rising inflation. That’s because the dividends they pay tend to rise in line with prices, unlike fixed-rate securities.


Making money by not losing money

The main reason for the SG Quality Income index’s outperformance of the broad markets over the long term is the protection from drawdowns it offers in falling markets. For example, during the market stress in Q4 2018 the index outperformed the MSCI World by more than 6 percentage points. Its volatility (10.6%) was also significantly lower than that of the MSCI World (16.6%) over the last quarter of last year. As we can see in the following table, high-quality stocks have historically been much less volatile and experienced much lower drawdowns than low-quality stocks. 


Buying better quality companies provide your risk control

(performance by Merton quintiles)

              chart 3

Data based on FTSE World Developed stocks, covers the period from 01/01/1990 to 31/12/2018. Past performance is not a reliable indicator of future performance. Source: SG Cross Asset Research/Equity Quant, FTSE, Factset. 

An attractive option for any kind of investor

If an absolute return investor or multi-asset investor is looking for yield, equity income stocks could look a lot more enticing than sovereign or corporate bonds, which are currently providing historically low yields and offer no protection against inflation.

It’s true that equity income strategies tend to underperform the broad markets when they’re experiencing the kind of irrational exuberance that’s driven them so much higher in recent years. But quality income strategies that value balance sheet strength above all else might be a better option should the markets take another turn for the worse.

And that’s exactly what seems to have been in the minds of European investors this year. European equity income ETFs have received net inflows every month so far in 2019, while broad European equity ETFs have experienced outflows every month.  It seems that now might indeed be a good time to allocate to this kind of strategy.


Net new assets of income generation and broad European equity ETFs in the European ETF market in 2019 (EUR million)

                 Chart 4

Source: Lyxor International Asset Management, Bloomberg, data as at 30 April 2019

 Why choose Lyxor for quality income?

Our quality income indices target only the most robust and stable businesses in the developed world.  We provide indices covering the global stock markets and a strategy specific to Europe. 

   why income

Relevant products


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).

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.

Connect with us on linkedin