SSGA cross-lists euro-hedged US dividend and EM govies ETFs on SIX

Sep 2nd, 2019 | By | Category: Alternatives / Multi-Asset

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State Street Global Advisors (SSGA) has cross-listed two currency-hedged ETFs on SIX Swiss Exchange.

SSGA cross-lists euro-hedged US dividend and EM govies ETFs on SIX

State Street Global Advisors has cross-listed two currency-hedged ETFs on SIX Swiss Exchange.

The funds provide investors with exposure to US firms with sustainable dividends and to short-term emerging market government debt while hedging international currency exposures relative to the euro.

US sustainable dividends

The SPDR S&P US Dividend Aristocrats EUR Hdg UCITS ETF (USDE SW) is linked to the S&P High Yield Dividend Aristocrats EUR Dynamic Hedged Index which includes stocks of the S&P Composite 1500 Index that have increased dividends every year for at least 20 consecutive years.

This selection process is designed to help investors to avoid ‘dividend traps’, where a stock’s dividend yield looks attractive but the firm’s fundamentals are not able to support the payouts in the long-term, leading to a reduction or scrapping of the dividend.

Constituents are weighted by annual dividend yield, subject to a 4% cap per stock. The index is reconstituted annually in January and rebalanced quarterly.

The ETF comes with an expense ratio of 0.40% and is also available on Xetra under the ticker SPPD GY. Distributions are sent to investors on a quarterly basis.

The unhedged version of the fund – the SPDR S&P US Dividend Aristocrats UCITS ETF (USDV SW) – trades in Swiss francs, comes with an expense ratio of 0.35%, and houses over $3.0 billion in AUM.

Emerging market bonds

The SPDR ICE BofAML 0-5 Year EM USD Government Bond EUR Hdg UCITS ETF (EMHE SW) is linked to the ICE BofAML 0-5 Year EM USD Government Bond ex-144a EUR Dynamic Hedged Index. The index covers US dollar-denominated emerging markets government debt issued in the US domestic market. Bonds must have a remaining maturity under five years to be eligible for inclusion.

The index is currently yielding 4.9% and has an effective duration of 2.4 years.

Two-fifths of the index is allocated to bonds rated high yield, while, within investment grade, the largest categories of holding are Baa (27.8%), A (13.4%), and Aa (18.0%). The largest country exposures are to South Korea (6.7%), Turkey (6.7%), Indonesia (6.1%), Qatar (5.7%), and the UAE (4.5%).

The fund comes with an expense ratio of 0.47% and is also available on Xetra and Borsa Italiana under the tickers ZPR6 GY and EMHE IM. Income is accumulated within the portfolio.

The unhedged SPDR ICE BofAML 0-5 Year EM USD Government Bond UCITS ETF (EMH5 SW) also trades in Swiss francs, costs 0.42%, and has $220m AUM.

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