Deutsche Bank Expands Its Lineup Of Hedged Equity ETFs

Thanks to some efforts by Japan to weaken their currency, investors have begun to embrace hedged ETFs for international exposure. This has been a pretty solid strategy too, as hedged Japan funds have easily outperformed their unhedged cousins over the past year, with gains of more than 60% seen in some products compared to 30% gains in unhedged counterparts.

While this has been great news for ETFs like DXJ which has attracted the lion’s share of the assets, the real winner was in the db X-Trackers MSCI Japan Hedged Equity ETF (NYSEARCA:DBJP). This fund easily outperformed DXJ, and though it still lags in terms of assets, it has seen a surge in interest as well (see Time to Focus on Yen Hedged Japan ETFs?).

Thanks to this, Deutsche Bank is now looking to expand its lineup of funds (under the db X-Tracker brand), targeting other regions and nations with a currency-hedged approach. The company has put out three such products, and we have highlighted some of the key details about each below:

db X-Tracker MSCI United Kingdom Hedged Equity Fund (NYSEARCA:DBUK)

If investors want targeted exposure to the UK without the risks from a depreciating pound, DBUK could be a solid pick. The ETF tracks the MSCI United Kingdom US Dollar Hedged Index, charging investors 45 basis points a year in fees for the exposure.

The underlying index has about 100 stocks in its basket, and pays a solid yield of over 3.7%, suggesting it may be a solid choice for income too. In terms of sector and individual holdings, financials, energy and consumer staples all take up sizable allocations (at least 16.6%), while HSBC, Vodafone and BP take the top individual spots and all account for at least 5% of the total.

db X-Trackers MSCI Europe Hedged Equity Fund (NYSEARCA:DBEU)

For broad European exposure, DBEU is an interesting choice, charging investors 45 basis points a year. The product tracks the MSCI Europe US Dollar Hedged Index, tracking the return of stocks in 16 different European nations, without currency risks.

Financials take the top spot at 21.3% of the portfolio, and are followed by consumer staples (14.2%), health care (12.7%), and industrials (11.5%). The index has over 440 constituents in its basket, and no single company makes up more than 3% of the total. Country exposure is heavily tilted to the UK (33.7%), while France, Switzerland, and Germany receive double digit allocations as well.

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