This week, Wall Street welcomed three new currency-hedged ETFs, one from WisdomTree and two from Deutsche Asset & Wealth Management.
Japan Hedged Dividend Growth Fund
This morning, WisdomTree launched its new Japan Hedged Dividend Growth Fund (JHDG ), which is designed to provide exposure to dividend-paying stocks of companies with growth characteristics that are incorporated in Japan. At the same time, the fund aims to neutralize exposure to fluctuations between the yen and the U.S. dollar.
JHDG’s underlying index, the WisdomTree Japan Hedged Dividend Growth Index, is a fundamentally weighted index that screens dividend-paying Japanese equities on their combined ranking of growth, quality, and valuation factors. The growth factor ranking is based on long-term earnings growth expectations, the quality factor ranking is based on three year historical averages for return on equity and return on assets, and the valuation factor is based on the earnings yield. The selected companies are then weighed based on annual cash dividends paid.
The resulting portfolio consists of roughly 250 individual securities, from various industries including consumer discretionary, industrials, information technology, telecom, consumer staples, and materials. Its current top holdings include:
- NTT DoCoMo Inc (9437)
- Nippon Telegraph & Telephone C (9432)
- Canon Inc (7751)
- Toyota Motor Corp (7203)
- Japan Tobacco Inc (2914)
In its press release, WisdomTree Director of Research Jeremy Schwartz commented:
“As Abenomics continues to gain traction, we see companies becoming more profitable and are becoming better stewards of their financial capital, returning more of it to shareholders through dividends and stock buybacks to achieve higher returns on equity (ROE). We believe that JHDG captures the intersection of these trends with a beneficial marriage of growth and quality characteristics without the added exposure to the risk of the yen,”
JHDG charges an expense ratio of 0.43%. Be sure to check out WisdomTree’s investment case for JHDG.
Deutsche Asset & Wealth Management Launch DBIF and DBRE
Also this morning, Deutsche Asset & Wealth Management introduced two new currency-hedged products: the S&P Hedged Global Infrastructure ETF (DBIF ) and the Dow Jones Hedged International Real Estate ETF (DBRE ).
DBIF, which charges 0.45%, seeks exposure to an alternative income source via diversified exposure to the global infrastructure industry while mitigating exposure to fluctuations between the U.S. dollar and non-U.S. currencies. The fund’s underlying index targets equity securities of infrastructure issuers in developed markets, including the US, Canada, Australia, Italy, France, and the U.K. Digging a bit deeper, U.S. equities account for over one-third of total holdings. From a sector perspective, DBIF invests in:
- Transportation infrastructure
- Electric utilities
- Oil, gas & consumable fuels,
DBRE aims to offer exposure to a broad range of international REITs and ROECs while mitigating exposure to fluctuations between the U.S. dollar and 17 non-U.S. currencies. The fund’s underlying index is comprised of real estate securities domiciled in countries outside the U.S., including Japan, the U,K,, Australia, France, Canada, Hong Kong and Singapore. DBRE charges an expense ratio of 0.48%.
Commenting on the launches, Head of Deutsche AWM’s Passive Business in the Americas Fiona Bassett stated:
“DBRE and DBIF seek to meet clients’ growing interest in real estate and infrastructure markets, while aiming to mitigate potential currency risk associated with international investing. With the addition of the two new currency-hedged indexing products, Deutsche Asset & Wealth Management is committed to expanding its Deutsche X-trackers platform with the evolving needs of the market.”
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Disclosure: No positions at time of writing.