First Floating Rate Treasury ETFs Debut; iShares Adds Currency-Hedged Funds

by on February 7, 2014 | ETFs Mentioned:

U.S. equities struggled to find a definitive direction this week, though a better-than-expected jobless claims report managed to boost stocks during Thursday’s session. ETF issuers, however, kicked off the month of February with a bang, bringing to market a slew of new products. iShares added five new funds to its impressive lineup, including three new currency-hedged funds and a muni bond ETF. iShares and WisdomTree both debuted floating rate Treasury bond ETFs, the only fund targeting the new security [see How to Beat the S&P 500 with Style ETFs].

BondsThis year, for the first time in its history, the U.S. Treasury rolled out floating rate notes (FRNs), marking the first new class of issuance by the Treasury since it issued TIPS in 1997. On January 29, 2014, the U.S. Treasury completed its first floating rate auction, and now two issuers have debuted the first ever ETFs to offer exposure to the new notes:

iShares also debuted three new currency-hedged funds, as well as an addition to its municipal series lineup:

  • Currency Hedged MSCI EAFE ETF (HEFA): This fund tracks the MSCI EAFE 100% Hedged to USD Index, which is composed of large- and mid-capitalization equities in Europe, Australasia, and the Far East while mitigating exposure to fluctuations between the value of the component currencies and the U.S. dollar. It charges 0.39%.
  • Currency Hedged MSCI Germany ETF (HEWG): This ETF tracks the MSCI Germany 100% Hedged to USD Index and also aims to mitigate currency fluctuations between the U.S. dollar and the euro. Its expense ratio is slightly higher than HEFA, coming in at 0.53%.
  • Currency Hedged MSCI Japan ETF (HEWJ): This fund seeks to replicate the MSCI Japan 100% Hedged to USD Index, which mitigates currency fluctuations between the U.S. dollar and the Japanese yen. It charges 0.48%.
  • 2019 AMT-Free Muni Term ETF (MUAH): This fund tracks the S&P AMT-Free Municipal Series 2019 Index, which measures the performance of investment-grade, non-callable U.S. municipal bonds maturing in 2019. The fund is comprised of state, local, and agency munis that are exempt from U.S. federal income taxes and the federal alternative minimum tax. MUAH charges 0.30%.

Follow me on Twitter @DPylypczak.

Disclosure: No positions at time of writing.