Deutsche rolls out GBP-hedged share class for MSCI World ETF

Aug 8th, 2017 | By | Category: Equities

Deutsche Asset Management has launched a new share class for its db x-trackers MSCI World Index UCITS ETF, listed on the London Stock Exchange. The new share class (Ticker: XDWG) allows investors to gain access to the performance of the MSCI World Index, a widely followed benchmark for global equities performance, while hedging currency risk relative to the British pound.

British Pounds Sterling

XDWG mitigates the risk of adverse currency movements between global currencies and the British pound, while tracking the MSCI World Index.

The MSCI World Index captures large-, and mid-cap representation across 23 developed markets, covering approximately 85% of the free float-adjusted market capitalisation in each country. The US dominates the index in terms of country exposure, accounting for a weight of almost 60%, while Japan (8.7%), the UK (6.6%) and France (3.9%) make up the next largest exposures. There are 1,656 constituents as of 30 July 2017 with the largest being Apple at a weight of 2.1%.

XDWG distributes income generated within the fund and has a total expense ratio (TER) of 0.29% which is the lowest fee of any MSCI World GBP-hedged ETF in the market.

Using back-tested data, the MSCI World 100% hedged to GBP TRN Index which underlies the new share class has returned 13.0% per annum over the past five years.

Source: Deutsche Asset Management.

Investors can gain unhedged exposure to the MSCI World Index through a number of Europe-listed ETFs, the cheapest of which is the HSBC MSCI World UCITS ETF (LON: HMWO) at a TER of just 0.15%. HMWO has approximately £200 million in assets under management (AUM).

Deutsche’s unhedged version, the db x-trackers MSCI World Index UCITS ETF (LON: XWLD), is also competitively priced, costing 0.19%. It has over £1.5 billion in AUM. The iShares Core MSCI World UCITS ETF (LON: SWDA) is the largest ETF in Europe to track the MSCI World. It has AUM of £8.1bn and a TER of 0.20%.


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