New Deka ETF tracks quality eurozone government bonds

Nov 20th, 2015 | By | Category: Fixed Income

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Deka Investments, a German provider of exchange-traded funds, has launched a new ETF, the Deka Eurozone Rendite Plus 1-10 Bond Index (ELFD GY), offering exposure to the highest yielding eurozone government bonds that possess investment grade status. The fund tracks the performance of the Solactive Eurozone Rendite Plus 1-10 Bond Index and has begun trading on the Xetra and Borse Frankfurt exchanges.

New Deka ETF tracks quality eurozone government bonds

The Deka Eurozone Rendite Plus 1-10 Bond ETF provides access to high yielding bonds issued by eurozone governments. 

The fund invests in highly liquid “plain vanilla” government bonds, denominated in euros, and issued by eurozone countries with an outstanding volume of at least €2bn. Constituent countries are required to be classified with ‘investment grade’ status, possessing a minimum rating of BBB- or its equivalent.

The six eurozone countries with the highest five-year yields are selected and a maximum of five bonds per country are held within the ETF. Eurozone government bonds with a remaining maturity between one and ten years are permitted within the fund, while country exposures are capped at 20% as of the date of rebalancing. The fund is weighted according to nominal value with index reviews and adjustments occurring quarterly; however, the credit quality of constituent countries are checked on a monthly basis with a drop below investment grade status prompting an unscheduled review.

As of 18 November 2015, the fund’s country exposures were in Spain (20.1%), Italy (20.0%), France (19.9%), Belgium (19.9%), Ireland (15.6%) and Slovakia (4.4%). The fund carries a total expense ratio of 0.15%.

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