Key Highlights

  • UBS Core BBG US Treasury 10+ UCITS ETF (LSE:0E5Y) holds US Treasuries maturing in more than ten years, hedged to euros.
  • Total fund Assets are approximately $500 million to $1 billion across share classes.
  • Indicative Yield to Maturity is around 5% to 5.2% in US dollar terms before hedging.
  • One-year NAV total return is negative to flat as long-term yields climbed.
  • Duration of about 16 years makes it highly sensitive to any turn in yields.

Fund Overview

UBS Core BBG US Treasury 10+ UCITS ETF (LSE:0E5Y) is a low-cost way to own long-dated US Government Bonds while hedging the dollar back to euros. With 30-year Treasury yields trading above 5% for much of the autumn, long-duration Treasury ETFs have become one of the most debated trades on financial television and social media, with investors split on whether yields have peaked.

Fund Snapshot

  • AUM: approximately $500 million to $1 billion across share classes.
  • Approx NAV total return: negative to flat over one year in EUR hedged terms.
  • Indicative yield: roughly 5% to 5.2% before hedging costs.
  • Ongoing charge: about 0.10% or lower.
  • Benchmark: Bloomberg US Long Treasury Index, hedged to EUR.
  • Distribution: distributing class.

Fund Objective, Focus and Portfolio Composition

The fund tracks the Bloomberg US Long Treasury Index, which covers fixed-rate US Treasury bonds with ten or more years to maturity. The EUR Share Class uses monthly currency forwards to hedge the dollar back to euros.

Holdings number around 80 to 100 Treasury bonds, all issued by the US government, giving 100% sovereign exposure to the United States. Maturities range from 10 to 30 years, with most of the weight in 20-year and 30-year bonds. Duration is around 16 years. Top holdings are recent 30-year and 20-year auctions. Credit quality reflects the US sovereign rating.

Performance Review

The past twelve months have been difficult for long-duration Treasury holders. As 30-year yields climbed above 5%, bond prices fell, wiping out coupon income for much of the period. The partial rally in early November, when the 10-year yield retreated from about 5.35% toward 5%, showed how quickly the fund can recover when sentiment turns, with long Treasuries typically moving two to three times as much as intermediate bonds.

Market Backdrop and Latest Trends

Long-dated US Treasuries have had a punishing year. The Federal Reserve kept its target range at 3.75%-4.00% in October, and after US employers added 165,000 jobs in the latest payrolls report, markets moved to price a high probability of a December rate increase. The 10-year Treasury Yield touched about 5.35% during the autumn sell-off before settling back near 5%. The 30-year yield moved higher still, reflecting concerns about persistent inflation, heavy Treasury issuance to fund large US deficits and debate over the Fed’s independence.

The Middle East conflict, now in its ninth month, pushed Brent Crude above $126 at its peak before oil fell more than 10% in a matter of days after the US midterm elections. Energy-driven Inflation fears hit the long end of the curve particularly hard, because investors Demand higher compensation for holding bonds over decades when the inflation outlook is uncertain. Yet government bonds also attracted buyers during Equity sell-offs tied to doubts over artificial intelligence spending, showing that Treasuries still play a defensive role.

For euro-based investors in UBS (Lux) Fund Solutions - UBS Core BBG US Treasury 10+ UCITS ETF (hedged to EUR) Dis (LSE:0E5Y), hedging costs matter. The European Central Bank has tightened policy this year, narrowing the gap with US rates and reducing the cost of hedging dollar assets. That has made EUR-hedged long Treasury exposure more attractive than it was in 2023 and 2024, and several European asset managers have described long Treasuries as offering asymmetric upside if US growth slows in 2027.

What Investors Can Watch Going Forward

Several signals are likely to shape the next leg of performance for UBS (Lux) Fund Solutions - UBS Core BBG US Treasury 10+ UCITS ETF (hedged to EUR) Dis (LSE:0E5Y):

  • The Fed’s December meeting and its updated rate projections.
  • US CPI and core PCE inflation, which shape long-term inflation expectations.
  • Treasury Refunding announcements and demand at 20-year and 30-year auctions.
  • Oil prices and any settlement in the Middle East.
  • ECB policy, which affects euro hedging costs.
  • Equity market stress, which tends to support long Treasuries as a safe haven.

Key Risks to Consider

Interest rate risk is by far the largest risk, since a 1% rise in long-term yields could reduce the fund’s value by around 16%. Other risks include inflation surprises, US fiscal concerns, hedging cost changes and the possibility of reduced foreign demand for Treasuries.

Bottom Line

UBS (Lux) Fund Solutions - UBS Core BBG US Treasury 10+ UCITS ETF (hedged to EUR) Dis (LSE:0E5Y) is a high-conviction instrument. Investors who believe US long-term yields are near a peak can capture both a 5% income stream and significant upside if yields fall, while those worried about inflation and deficits should size positions carefully.