Tag Archives: transactionname

Flurry Of New Currency Hedged ETFs Fuels Price War

Currency hedging ETFs have been in vogue this year, given the ultra-loose monetary policy across the globe and a strong U.S. dollar against a basket of other currencies. The bullish trend in the dollar is likely to continue, as the Fed is primed to increase interest rates for the first time since 2006 later this year as the U.S. economy roars back to life. While cheap money flows are making international investment a compelling opportunity for U.S. investors this year, a strong dollar could wipe out the gains when repatriated in U.S. dollar terms, pushing international investment into the red, in spite of well-performing stocks. As a result, investors are flocking to currency-hedged ETFs. This has a double benefit. While these ETFs tap bullish international fundamentals, they dodge the effect of a strong greenback. So far, WisdomTree Investments (NASDAQ: WETF ) has been clearly leading the space with the WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) and the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) having AUM of $20.7 billion and $18.7 billion, respectively, thanks to the first-mover advantage, liquidity, price and brand name. However, its dominance now seems to be challenged by a flurry of new currency-hedged ETFs that have fueled a price war in the space. This is especially true as some issuers such as PowerShares, ProShares, State Street (NYSE: STT ) and iShares have come up with low-cost products in recent months that are much cheaper than those offered by WisdomTree. These could provide stiff competition to the established ETFs in the space, dulling their appeal. Here, we have highlighted some of the low-cost currency-hedged ETFs, all launched on the market in the past couple of months. ProShares Hedged FTSE Japan ETF (HGJP) This ETF provides exposure to the Japanese equity market with no currency risk by tracking the FTSE Japan 100% Hedged to USD Index. It charges just 0.23% in annual fees, which is half the expense ratio for a similar exposure provided by other products. Expense ratios for the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ), the iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) and DXJ are 0.45%, 0.48% and 0.48%, respectively. ProShares Hedged FTSE Europe ETF (HGEU) This fund targets the European market and provides a hedge against six major European currencies. It follows the FTSE Developed Europe 100% Hedged to USD Index, charging investors 0.27%. Here again, the expense ratio of HGEU is half compared to that of 0.45% for the Deutsche X-trackers MSCI Europe Hedged Equity ETF (NYSEARCA: DBEU ), 0.51% for the iShares Currency Hedged MSCI EMU ETF (NYSEARCA: HEZU ) and 0.58% for the WisdomTree Europe Hedged Equity ETF ( HEDJ ). PowerShares Europe Currency Hedged Low Volatility Portfolio ETF (NYSEARCA: FXEU ) This ETF offers new ways to gain exposure to European stocks, and is perhaps the first product providing two popular ETF investing strategies – low volatility and currency hedging – at the same time. Despite the fact that its unique features and combo offer what the others lack, FXEU charges a low expense ratio of 0.25%. SPDR EURO STOXX 50 Currency Hedged ETF (NYSEARCA: HFEZ ) This ETF looks to track the performance of the EURO STOXX 50 Hedged USD Index. It is basically a holding of the SPDR EURO STOXX 50 ETF (NYSEARCA: FEZ ), with currency hedge tacked onto it. The fund has an expense ratio of 0.32%, which is lower than that of many other products in the European currency-hedged space. iShares Currency Hedged MSCI ACWI ex U.S. ETF (NYSEARCA: HAWX ) This fund offers exposure to stocks in the developed (excluding the U.S.) and emerging markets by tracking the MSCI ACWI ex USA 100% Hedged to USD Index, while at the same time providing a hedge against any fall in the currencies of the specified nation. It is basically a holding of its unhedged version, the iShares MSCI ACWI ex-U.S. Index ETF (NASDAQ: ACWX ), with currency hedge tacked onto it. The product charges 0.36%, which is cheaper by 4 bps compared to the Deutsche X-trackers MSCI All World ex US Hedged Equity ETF (NYSEARCA: DBAW ) providing a similar exposure in the space. Given the lower expense ratios, these ETFs could see solid asset flows in the coming months if they succeed in outperforming or at least remain on par with the others in the space. The trends too should continue to favor international investing. Original Post

Great ETF Picks For 2nd Half Of 2015

The global stock market ended the first half of the year in the green amid bouts of volatility and uncertainty. Though U.S. stocks, as represented by the S&P 500 index, have recorded their worst performance in five years, foreign investing took the credit. All the thanks go to ultra-easing policies across the globe in stark contrast to the U.S. Policy easing has however not helped to reduce volatility, which at the moment seems to be the only constant factor. The markets are grappling with the dire issue of unpaid debts in Greece and Puerto Rico, as well as the looming stock bubble in China. The developments in these areas will continue to unnerve investors as the second half unravels. There is the additional uncertainty of interest rate hike in the U.S. while a strong dollar will continue to play foul in the global financial world (read: ETF Strategies for 2H ). This is especially true as the U.S. economy has been on a moderate growth path as reflected in increased consumer confidence, higher spending power, renewed optimism in housing recovery and an improving job market. Meanwhile, waves of merger and acquisition deals will continue to brighten up the stock world. However, any downbeat data, including disappointing job growth, no wage increase, lower inflation, and less manufacturing and industrial activity, could delay rate hike or bring in more volatility. That being said, it seems that the second half will most likely resemble the first, extending the winning streak of the top performing ETFs of 1H. In fact, most of these ETFs have a top Zacks ETF Rank of 1 or “Strong Buy”, suggesting their continued outperformance for the rest of the year (read: Top Performing ETF Areas of 1H ). Below, we have highlighted some excellent ETF picks from three different categories given that there will be no major shift in fundamentals in the coming months. These funds should lead to big gains for investors and are worth a closer look heading into the second half. U.S. Sector ETFs Healthcare has been the soaring corner of the broad U.S. market so far this year, and this trend is likely to continue given the M&A boom, strong earnings growth, cost-cutting efforts, aging population and Obamacare. Combined with attractive fundamentals, the sector provides a defensive tilt to the portfolio due to its non-cyclical nature unaffected by global turmoil (read: 3 Buy-Ranked ETFs for a Healthy Portfolio ). Investor should focus on the iShares U.S. Healthcare Providers ETF (NYSEARCA: IHF ), which looks to offer exposure to the companies that provide health insurance, diagnostics and specialized treatment. Another alternative could be a small-cap play on the broader sector through the PowerShares S&P SmallCap Health Care Portfolio ETF (NASDAQ: PSCH ). Both funds gained 20.4% and 18.5%, respectively, so far this year. U.S. Style-Box ETFs 2015 is the year of growth as Americans are brimming with confidence instilled by their fat wallets and rising income. In particular, the small-cap space will likely be the major beneficiary of this trend as pint-sized stocks are closely tied to the U.S. economy and generate most of their revenues from the domestic market. This makes them safer bets than their large and mid-cap counterparts during a global turmoil. The Guggenheim S&P SmallCap 600 Pure Growth ETF (NYSEARCA: RZG ), which gained nearly 11% in the year-to-date frame, looks to be a compelling choice for the rest of the year. Global ETFs Global investing has been in vogue this year, reversing the past three-year trend. Though many developed and developing economies are still struggling with slower growth, Europe and Japan remained the bright spots and are gaining a lot of attention from investors this year. The iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) and the WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) are the two popular picks in the broad Japanese and European stock markets. Both funds provide hedge against any fall in their respective currencies – yen and euro – which have been badly hammered. Moreover, rising concerns over Grexit have depressed many European ETFs in recent weeks, providing a solid entry point. HEWJ and HEDJ are up 17.6% and 10.5%, respectively, so far this year. In the developing world, China ETFs have been performing amazingly and are still on top at the midway mark, but it has been entering the bear market lately, dulling the appeal for Chinese products. On the other hand, the Indian economy has regained its strong momentum lately, after losing its shine this year. If this trend persists, the EGShares India Consumer ETF (NYSEARCA: INCO ) could be the best way to go. The fund added nearly 8% in the year-to-date time frame. Original post

Inside ALPS’ New Sector Leaders’ ETF

Probably, every investor dreams of beating the benchmark index. And to fulfill this investor desire, issuers are increasingly resorting to smart-beta or unique approaches. After all, with the industry presently sporting close to 1,745 products and sitting on an asset base of $2.13 trillion, it is tough to wait out competition with a product that lacks novelty. To serve the need of the hour, ALPS recently launched an ETF, which does not focus on a specific sector or style like most, but uses the equal-weighted strategy as its winning mantra. To do so, the issuer targets the U.S. market itself, which is sitting pretty right now amid global market gloom spread by ‘Grexit’ worries and the Chinese equities sell-off. Below we give the details of this ETF. ALPS Sector Leaders ETF (NYSEARCA: SLDR ) in Focus The fund looks to track the S-Network Sector Leaders Index which is a benchmark of the U.S. large cap equities with equally weighted sector exposure. The index starts screening stocks from the S&P 500 index emphasizing high quality and growth scores. From every nine sectors of the S&P 500, five securities with the highest growth criteria are chosen. The fund charges 40 bps in fees. Investors should also note that the product uses an equal-weight methodology both in terms of individual securities and sectors. As a result, each company takes up about 2% of the total while each of the sectors has a roughly 11% weighting. Cigna Corp (CT) (2.64%), Alexion Pharma (NASDAQ: ALXN ) (2.45%) and Edward Lifesciences (NYSE: EW ) (2.39%) are top three holdings of the fund. How Does it Fit in a Portfolio? This ETF could be an interesting fit for investors who want a slight smart-beta approach, but want to stay invested in the broad markets. The product could also be an intriguing addition for those seeking an equal-weight strategy. The ETF is a fairly priced option as the fees on this product is in line with the average expense ratio of the U.S. large-cap blend equities ETFs. However, costs are roughly 4.5 times higher than what the biggest U.S. large-cap blend ETF – the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) – charges. The fund’s strategic approach might have caused it to charge higher than the plain vanilla market-cap oriented funds like SPY, the iShares Core S&P 500 ETF (NYSEARCA: IVV ) and the Vanguard S&P 500 ETF (NYSEARCA: VOO ) . In a nutshell, the fund offers huge diversification benefits with lower volatility as it provides meaningful exposure to every sector of the market. None of the sectors dominates the fund’s returns, thereby preventing the portfolio from heavy concentration. ETF Competition While SLDR may have a lucrative investment objective, the ETF will be facing some stiff competition for assets from some of the players in the U.S. large-cap blend equities ETFs. Among these, the Guggenheim S&P Equal Weight ETF (NYSEARCA: RSP ) , the PowerShares Russell 1000 Equal Weight Portfolio ETF (NYSEARCA: EQAL ) and the ALPS Equal Sector Weight ETF (NYSEARCA: EQL ) seem to be the top contenders. Link to the original article on Zacks.com