Deutsche AWM launches currency-hedged high-income ETFs on NYSE

Aug 13th, 2015 | By | Category: Equities

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Deutsche Asset & Wealth Management (Deutsche AWM) has announced the launch of four currency-hedged high dividend yield exchange-traded funds (ETFs) on the NYSE Arca.

Deutsche AWM launch high dividend yield, currency-hedged ETFs

Deutsche AWM’s new NYSE-listed ETFs offer access to high dividend international equities while controlling for currency risk.

The Deutsche X-trackers MSCI High Dividend Yield Hedged Equity ETF suite offers US investors the opportunity to generate sustainable income from a diversified international equity portfolio while mitigating the currency risk associated with investing internationally.

Two of the most prevalent investment themes of the moment are the search for yield, in this low interest rate environment, and the erosion of international equity returns caused by the strengthening US dollar.

According to Deutsche AWM, income-oriented international equity investments currently offer higher yields than most other liquid asset classes. This new range of funds presents investors with a product to harvest this income with reduced exposure to international currency fluctuations.

“In this low interest rate environment, we believe that we are delivering unique solutions to investors seeking income-oriented investments,” said Fiona Bassett, Head of Deutsche AWM’s Passive Business in the Americas. “As a European-based bank, we will continue to leverage our local insight to offer the most comprehensive suite of currency-hedged international equity ETFs in the US.”

A common methodology is applied to select constituents for each of the funds from their respective MSCI parent index. The investable universe is screened for companies which offer dividend sustainability and persistency, as well as for quality and price performance of the companies. The fund holdings are finally selected as those with a dividend yield greater than or equal to 1.3 times the dividend yield of the parent index.

The suite offers a diverse set of regional exposures:

Deutsche X-trackers MSCI EAFE High Dividend Yield Hedged Equity ETF (HDEF)
Carries an expense ratio of 0.45% and has current top regional exposures to the UK (39.2%), France (14.5%), Australia (13.1%), Germany (8.5%) and Switzerland (4.1%).

Deutsche X-trackers MSCI Eurozone High Dividend Yield Hedged Equity ETF (HDEZ)
Carries an expense ratio of 0.45% and has current top regional exposures to France (23.4%), Germany (22.0%), Finland (17.9%), Spain (17.1%) and Italy (14.9%).

Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (HDEE)
Carries an expense ratio of 0.65% and has current top regional exposures to China (31.3%), South Africa (17.4%), Taiwan (12.1%), Russia (9.8%) and Brazil (8.3%).

Deutsche X-trackers MSCI All World ex-US High Dividend Yield Hedged Equity ETF (HDAW)
Carries an expense ratio of 0.45% and has current top regional exposures to the UK (31.1%), Canada (10.0%), France (9.1%), China (8.3%) and Australia (6.8%).

This announcement from Deutsche AWM further highlights both the investor demand for ETF products tailored to meet specific needs and the innovation which continues in the smart beta space.

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