Deutsche Launches Four Currency-Hedged Dividend ETFs; Guggenheim Debuts Strategic Beta Real Estate ETF

On Wednesday, Deutsche Asset & Wealth Management introduced a suite of products targeting foreign equities, with a focus on high dividend yields. Each ETF is currency-hedged:

• MSCI EAFE High Dividend Yield Hedged Equity ETF (HDEF ): This fund aims to target large- and mid-cap companies in the EAFE region, with higher dividend income and quality characteristics than average yields that are both sustainable and persistent. The ETF charges an expense ratio of 0.45%.

• MSCI Eurozone High Dividend Yield Hedged Equity ETF (HDEZ ): This ETF utilizes the same methodology, but focuses on developed European companies from countries such as Germany, France, Finland, and Spain. It also charges 0.45%.

• MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (HDEE C+): This ETF targets high yielding companies from emerging-market countries, including stocks from emerging Europe, Asia, Africa, and Latin America. HDEE charges 0.65%.

• MSCI All World ex US High Dividend Yield Hedged Equity ETF (HDAW B-): This ETF seeks to provide exposure to high quality and high yielding companies outside of the U.S. It charges 0.45%.

Commenting on the launch, Head of Deutsche AWM’s Passive Business Fiona Bassett noted, “In this low interest rate environment, we believe that we are delivering unique solutions to investors seeking income-oriented investment. As a European-based bank, we will continue to leverage our local insight to offer the most comprehensive suite of currency-hedged international equity ETFs in the US.”

An ETF first, Guggenheim debuted its S&P 500 Equal Weight Real Estate ETF (EWRE ). The fund was created after the Global Industry Classification Standard (GICS) decided to elevate real estate from an “industry group” within the financials sector to its own sector category, which will become effective on August 31, 2016.

EWRE tracks the S&P 500 Equal Weight Real Estate IndexEstate Index, which equally weights the index constituents in the S&P 500 that are classified in the GICS Real Estate Industry Group, with an emphasis on exchange-traded equity REITs and real estate management and development companies – excluding mortgage REITs.

Guggenheim’s Managing Director of Product Development William Belden noted, “Recognizing that real estate is evolving into a separate asset class as a result of its growing importance to advisors and investors searching for income and capital appreciation and underscoring our firm’s commitment to providing clients with innovative investment solutions, Guggenheim is first to market today with a new equal-weighted sector ETF which could have considerable impact on portfolio planning and research. There are several reasons real estate can be considered an attractive asset class.”

As to why this may be a compelling investment, Belden gave two primary reasons: “First, real estate securities offer potentially attractive long-term total returns coming from both capital appreciation and higher-than-average income when compared to other equities. Second, EWRE’s underlying portfolio will be comprised primarily of equity REITs, which have a history of providing consistent, above-average dividends which can be used to meet current income needs or reinvested to accumulate wealth. Also, investing in real estate securities can be used as a hedge against inflation.”

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Disclosure: No positions at time of writing.