Scalper1 News
Currency hedging strategies have been in vogue since the start of this year given the ultra-loose monetary policy across the globe in stark contrast to the U.S. Fed policy of tightening its stimulus program. The popularity saw a rise last month when the Fed hinted at a modest hike in interest rates in December. The diverging policies have been pushing the U.S. dollar higher and other currencies lower. While monetary easing is making international investment a compelling opportunity in the U.S., a strong dollar could wipe out gains when repatriated in U.S. dollar terms, pushing international investment into the red even when international stocks performed well. As a result, investors flocked to currency-hedged ETFs to tap bullish international fundamentals, dodging the effects of a strong greenback. This is especially true as the currency-hedged funds look to strip out currency exposure to a foreign economy via the use of currency forwards or other instruments that bet against the non-dollar currency, while at the same time, offering exposure to foreign stocks. Given this, we have highlighted 11 currency-hedged ETFs for investors that are extremely popular in the market: WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) The ETF tracks the WisdomTree Europe Hedged Equity Index holding 129 securities with moderate concentration on the top 10 holdings at 25.5%. It is pretty well spread across a number of sectors, with consumer staples, industrials, consumer discretionary, healthcare and financials taking double-digit exposure each. Among countries, Germany (25.9%), France (24.3%), the Netherlands (17.2%) and Spain (16.4%) dominate the holdings list. The fund has AUM of $21.3 billion, and sees an average daily volume of about 4.9 million shares. It charges 58 bps in annual fees and gained 13.5% in the year-to-date time frame. The product has a Zacks ETF Rank of 3 or a “Hold” rating with a Medium risk outlook. WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) With AUM of $17.1 billion, this ETF targets the Japanese equity stock market without the currency risk by tracking the WisdomTree Japan Hedged Equity Index. Holding 314 stocks in its basket, the product is moderately concentrated across securities, with none holding more than 4.84% share. Consumer discretionary and industrials take the top two spots with 24.6% and 23.2% share, respectively, while information technology and financials round off the top four. The fund trades in solid volume of more than 6 million shares per day, and charges 48 bps in annual fees. It has risen nearly 14% so far this year, and has a Zacks ETF Rank of 2 or a “Buy” rating with a Medium risk outlook. Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEARCA: DBEF ) This fund targets the developed international stock market with no currency risk, and tracks the MSCI EAFE US Dollar Hedged Index. In total, the product holds 920 securities in its basket, with none holding more than 1.95% share, and charges 35 bps in fees. It is skewed toward the financials sector, which makes up one-fourth of the portfolio, while consumer discretionary, industrials, consumer staples and healthcare round off the top five with double-digit exposure each. Among countries, Japan takes the top spot at 23%, closely followed by United Kingdom (17%), France (10%) and Switzerland (10%). With an asset base of around $13.9 billion and average daily volume of about 4 million shares, the fund has gained 7.5% so far this year and has a Zacks ETF Rank of 3 with a Medium risk outlook. Deutsche X-trackers MSCI Europe Hedged Equity ETF (NYSEARCA: DBEU ) This product is the second popular European play that follows the MSCI Europe US Dollar Hedged Index. It holds 445 securities in its basket, which are widely spread out across components, with each holding less than 3% of assets. United Kingdom takes the top spot at 27%, while France, Switzerland and Germany round off the next three spots. From a sector look, financials accounts for the largest share at 22.5%, closely followed by consumer staples (14.9%) and healthcare (13.7%). The fund has amassed $3.8 billion in its asset base and trades in solid volume of more than 1.3 million shares a day. It charges 45 bps in fees per year, and has returned about 8% so far this year. The fund has a Zacks ETF Rank of 3 with a Medium risk outlook. iShares Currency Hedged MSCI EAFE ETF (NYSEARCA: HEFA ) This fund provides a broad foreign market play without currency risks. It focuses on the EAFE region – Europe, Australasia, Far East – for exposure, and follows the MSCI EAFE 100% Hedged to USD index. It is basically a holding of the iShares MSCI EAFE ETF (NYSEARCA: EFA ) with currency hedge tacked on. Financials dominates the fund’s return with one-fourth share, while consumer discretionary, industrials, consumer staples and healthcare also get double-digit allocation each. Top nations include Japan and United Kingdom, with double-digit exposure, while France, Switzerland and Germany round out the top five. The fund has AUM of $3.1 billion and average daily volume of roughly 1.4 million shares. It charges 35 bps in annual fees and has gained about 8% in the year-to-date time frame. HEFA has a Zacks ETF Rank of 3 with a Medium risk outlook. iShares Currency Hedged MSCI EMU ETF (NYSEARCA: HEZU ) This ETF is appropriate for investors looking invest in euro zone stocks. It follows the MSCI EMU 100% USD Hedged Index, and is a play on the popular unhedged fund iShares MSCI EMU ETF (NYSEARCA: EZU ) with a hedge to strip out the euro currency exposure. The fund holds 245 well-diversified securities in its basket, dominated by financials at 22.4% and followed by consumer discretionary (13.9%), industrials (12.7%) and consumer staples (11.1%). The ETF has amassed $1.9 billion in its asset base, and trades in solid volumes of more than 1.3 million shares a day. The fund charges 50 bps in annual fees from investors and has delivered impressive returns of nearly 14% so far this year. It has a Zacks ETF Rank of 3 with a Medium risk outlook. Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) This product tracks the MSCI Japan US Dollar Hedged Index, which provides exposure to the Japanese equity markets and hedges the Japanese yen to the U.S. dollar by selling Japanese yen forwards. The fund holds 319 securities in its basket, with the largest allocation going to Toyota Motor (NYSE: TM ), while other firms make up less than 3% of its assets. From a sector look, the ETF is well diversified, with consumer discretionary, financials, industrials and information technology accounting for double-digit allocation each. The fund has AUM of $1.9 billion and average daily volume of around 487,000 shares. Its expense ratio came in at 0.45%. The product is up about 14.8% so far this year, and has a Zacks ETF Rank of 2 with a Medium risk outlook. iShares Currency Hedged MSCI Germany ETF (NYSEARCA: HEWG ) This ETF targets the German equity market without the currency risk. It follows the MSCI Germany 100% Hedged to USD Index, and is basically a holding of the iShares MSCI Germany ETF (NYSEARCA: EWG ) with currency hedge tacked on. Consumer discretionary, financials, healthcare, materials and industrials are the top five sectors of the fund. The fund has accumulated $1.5 billion in AUM and charges 53 bps in annual fees. Volume is good, as it exchanges more than 1.2 million shares, on average, on a daily basis. It has added 11% this year, and has a Zacks ETF Rank of 2 with a Medium risk outlook. iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) This is another currency-hedged option to play Japanese equity, and is a hedged version of the popular iShares MSCI Japan ETF (NYSEARCA: EWJ ). Holding 320 stocks in its basket, consumer discretionary takes the top spot at 21.3%, closely followed by financials and industrials. The ETF has AUM of $712 million and sees volume of more than 593,000 shares a day. The expense ratio came in at 0.48%. The fund has gained 14.5% so far in the year and has a Zacks ETF Rank of 2 with a Medium risk outlook. WisdomTree International Hedged Quality Dividend Growth ETF (NYSEARCA: IHDG ) This product provides exposure to the dividend-paying companies with growth characteristics in the developed world ex U.S. and Canada and hedge exposure to fluctuations in the U.S. dollar and foreign currencies. This can be easily done by tracking the WisdomTree International Hedged Quality Dividend Growth Index. In total, the fund holds 213 stocks in the basket, with consumer staples and consumer discretionary as the top two sectors. In terms of country profile, United Kingdom takes the top spot at 20.2%, while Japan and Switzerland round off the next two spots with 13.3% and 10.2% share, respectively. WisdomTree Germany Hedged Equity ETF (NASDAQ: DXGE ) This German ETF follows the WisdomTree Germany Hedged Equity Index, holding 75 securities in its basket. It has a slight tilt toward the consumer discretionary sector with 21.6% share, followed by double-digit exposures in financials, industrials, materials and healthcare. It has managed assets worth $305.4 million and trades in good volume of 202,000 shares a day, on average. The fund charges 48 bps in annual fees, and is up 11.4% so far this year. DXGE has a Zacks ETF Rank of 2 with a Medium risk outlook. Original Post Scalper1 News
Scalper1 News