Source introduces currency-hedged versions of JPX-Nikkei 400 ETF

Mar 16th, 2015 | By | Category: Equities

Source, a London-headquartered provider of exchange-traded funds, has introduced USD- and EUR-hedged share classes for its Source JPX-Nikkei 400 UCITS ETF.

Source introduces currency-hedged versions of JPX-Nikkei 400 ETF

Source has introduced USD- and EUR-hedged versions of its JPX-Nikkei 400-linked ETF.

The currency-hedged share classes will enable US dollar- and euro-based investors to gain exposure to this increasingly important equity benchmark while mitigating the adverse effect of a depreciating yen.

In tandem with the new listings, Source has reduced the annual management fee of the fund (hedged and unhedged versions) to 0.20% from 0.29%.

Unveiled in 2013, the JPX-Nikkei 400 Index provides broad exposure across the large-cap, small-cap, growth and innovation segments of the Tokyo Stock Exchange, and focuses on companies with the potential to generate shareholder value.

The index was developed by Nikkei and the Japan Exchange Group, and selects stocks on the basis not only of size but also return on equity, operating profit, transparency and corporate governance. The index is rapidly becoming many institutional investors’ preferred benchmark for Japanese equity exposure.

Commenting on the new share classes, Michael John Lytle, Chief Development Officer at Source, said: “Japan has been one of the best performing equity markets over the past year, and the JPX-Nikkei 400 has outperformed better-known benchmarks such as the Nikkei 225 and Topix during this period. However, the stimulus measures that are helping to revive the country’s economic growth prospects are at the same time weakening the yen, which has diminished the overall returns for non-yen investors. The new hedged share classes offer protection from further devaluation – versus either the US dollar or the euro.”

The hedged versions will use one-month-rolling forward FX contracts, a frequency that provides an efficient level of hedging without incurring excessive costs. The EUR-hedged version will trade on Xetra and the USD-hedged version on the London Stock Exchange. The unhedged version is denominated in JPY and trades on Xetra in EUR and on the LSE in both USD and GBP.

The ETF is registered for sale in Austria, Finland, France, Germany, Ireland, Italy (for institutional investors only), Luxembourg, the Netherlands, Norway (for institutional investors only), Spain, Switzerland (for institutional investors only), Sweden and the UK.

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