Deutsche closes European and EM high dividend ETFs

Dec 18th, 2017 | By | Category: Equities

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Deutsche Asset Management has closed two US-listed Xtrackers ETFs – the Xtrackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (HDEE US) and the Xtrackers MSCI Eurozone High Dividend Yield Hedged Equity ETF (HDEZ US). The funds were de-listed from Cboe ETF Marketplace on 18 December 2017.

Deutsche closes European and emerging markets high dividend ETFs

The funds were de-listed from Cboe ETF Marketplace on 18 December 2017.

According to Deutsche, the decision to close these ETFs “followed a regular and ongoing process to review and evolve the Xtrackers product lineup to ensure the business continues to meet clients’ needs”. The funds had struggled to garner significant interest from investors, and the funds’ assets under management before closure represented just 0.05% of total AUM across the firm’s US-listed ETF suite.

The assets of the funds have begun to be liquidated and proceeds are scheduled to be sent to shareholders on or about 29 December 2017. During this liquidation process, each ETF will hold cash and securities that may not be consistent with the ETF’s investment objective and will likely incur higher tracking error than is typical for the ETF.

Two US-listed funds remain in Deutsche’s range of currency-hedged high dividend ETFs. The Xtrackers MSCI All World ex-US High Dividend Yield Hedged Equity ETF (HDAW US) and the Xtrackers MSCI EAFE High Dividend Yield Hedged Equity ETF (HDEF US) provide US investors with varying degrees of broad international equity exposure. Each has a TER of 0.45%.

Each fund’s investable universe is screened for companies which offer persistent and sustainable dividends, as well as including filters for quality and price performance of the companies. The funds’ portfolios comprise those companies with a dividend yield greater than or equal to 1.3 times the average dividend yield of the parent index. Additionally, a regular currency hedge is applied to each fund, mitigating the risk of adverse currency movements between the funds’ underlying currency exposures and the US dollar.

HDAW and HDEF have not been much more successful in gathering assets, however, with current AUM of $5m and $4m respectively, bringing into question the long-term viability of these funds.

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