This week, Wall Street was introduced to four new funds – three of which offer currency-hedged exposure while the other provides access to global spin-offs.
Direxion's New Leveraged, Currency-Hedged ETFs
On Wednesday, two new Direxion ETFs began trading:
- Daily MSCI Japan Currency Hedged Bull 2x Shares (HEGJ ): This ETF offers 2x exposure to the MSCI Japan US Dollar Hedged Index, which tracks Japanese large- and mid-cap equities and is 100% hedged to the USD by selling the JPY forward at the one-month Forward rate. HEGJ charges an expense ratio of 0.95%.
- Daily MSCI Europe Currency Hedged Bull 2x Shares (HEGE ): This fund offers 200% exposure to the MSCI Europe US Dollar Hedged Index, which comprises large- and mid-cap stocks across 15 developed-market European countries. The underlying index hedges its exposure to the USD by selling each foreign currency forward at the one-month Forward weight. HEGE also charges an expense ratio of 0.95%.
Commenting on the launch, President of Direxion Brian Jacobs stated, “Our interaction with clients tells us that there is a significant demand for magnified market exposure to currency-hedging equity strategies. With the U.S. dollar continuing to demonstrate strength against rival developed-market currencies, mitigating currency risk is a key concern for traders focused on international markets.”
Van Eck Introduces Global Spin-Off ETF
Van Eck expanded its lineup of Market Vectors ETFs with the launch of the Global Spin-Off ETF (SPUN ), which began trading on June 9. The fund tracks the Horizon Kinetics Global Spin-Off Index – a rules-based, equal-weighted index intended to track the performance of listed, publicly held spin-offs that are domiciled and trade in the U.S. or developed markets of Western Europe and Asia.
Currently, SPUN’s portfolio consists of 87 individual holdings, of which more than two-thirds are U.S.-domiciled. Equities from the United Kingdom, Australia, and Finland also receive meaningful allocations. In terms of sector breakdown, the fund invests roughly a quarter of its total assets in consumer discretionary; financials (19%), industrials (18%), materials (9%), and energy (7%) make up the next largest allocations.
SPUN charges an expense ratio of 0.55%. To learn more about the fund, be sure to check out this video interview with Horizon Kinetics research analysts Ryan Casey and Salvator Tiano.
State Street Creates Hedged EURO STOXX Fund
Introduced on June 9, the SPDR EURO STOXX 50 Currency Hedged ETF (HFEZ ) is the first fund to offer currency-hedged exposure to the popular EURO STOXX 50 Index (which is currently tracked by the popular SPDR fund (FEZ )). The index includes 50 liquid eurozone stocks from 12 countries, while looking to reduce the risk of currency fluctuations. HFEZ charges an expense ratio of 0.32%.
Commenting on the launch, SPDR’s James Ross stated, “Investors are reexamining their exposure to Europe in response to changing market dynamics and are looking for ways to address decoupling of US and European monetary policy which has led to depreciation of the euro versus the dollar. Investors have asked us to launch a hedged exposure to complement their holdings in FEZ. HFEZ can provide European equity exposure while seeking to mitigate the volatility caused by currency movements. We believe the EURO STOXX 50 index, a core European equity index that offers exposure to 50 highly traded stocks from 12 countries, is an effective way for investors to access Eurozone equities, especially as headline risks remain present.”
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Disclosure: No positions at time of writing.