Lyxor introduces euro-hedged share class for gender equality ETF

Mar 29th, 2018 | By | Category: Equities

European ETF provider Lyxor has introduced the Lyxor Global Gender Equality (DR) UCITS ETF – Monthly Hedged to EUR – Acc (ELLH GY), a currency-hedged share class of its global gender equality ETF.

Gender equality ETFs Lyxor UBS

The Lyxor Global Gender Equality UCITS ETF provides exposure to firms globally who are leading the field in terms of gender equality.

Listed on Deutsche Börse, the share class hedges the fund’s US dollar exposure to the euro, the fund’s trading currency.

The fund was the first ETF in Europe to track firms globally that are leading the field in gender equality.

It is linked to the performance of the Solactive Equileap Global Gender Equality Index which is backed by analytics powered by gender equality foundation Equileap.

The index consists of 150 equally weighted stocks based on Equileap’s global database covering more than 3,000 companies in 23 developed market countries. Each company has a market capitalisation of at least $2 billion and an average daily value traded of at least $5 million.

To refine the selection to just 150 companies, the index selects the highest ranked firms according to Equileap’s Gender Scorecard, a 19-criteria methodology inspired by the UN Women’s Empowerment Principles. Key criteria for selection are gender balance, equal compensation, work-life balance, policies promoting gender equality, transparency, and accountability. Index holdings are equally weighted and rebalanced annually.

Once a month, Lyxor will enact a currency hedge on the US dollar portion of the underlying exposure. As of 26 March 2018, this accounted for 50.7% of the total exposure; with the next largest currency exposure being the euro at 20.3%, approximately 30% of the portfolio is exposed to currency risk.

The sector leading the charge for gender equality in the workplace is financials which, at 20.1%, represents the largest exposure in the index. This is followed by consumer discretionary (13.7%), healthcare (10.0%), information technology (9.9%) and industrials (8.7%).

The fund was originally rolled out on Euronext Paris in November 2017 under the aptly named ticker ELLE FP. While ELLE FP trades in euros, subsequent listings in London trade in US dollars (Ticker: ELLE LN) or pounds sterling (Ticker: GEND LN). All previous listings did not incorporate hedging of currency exposures.

Income generated within the portfolio is accumulated in the fund. The currency-hedged share class has a total expense ratio (TER) of 0.30% which is higher than the original unhedged version which costs 0.20%.

While Lyxor had first-mover advantage by launching Europe’s first gender equality ETF, ELLE was followed swiftly by the UBS Global Gender Equality UCITS ETF (GENDER SW), which launched on SIX Swiss Exchange in January. GENDER has much in common with the Lyxor fund. Both charge 0.20% in fees, and both track a Solactive index powered by Equileap’s analytics. GENDER tracks the Solactive Equileap Global Gender Equality 100 Leaders Index which selects 100 firms globally from Equileap’s data with between 30 and 50 stocks chosen from the US equities universe.

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