Exchange traded products that invest in foreign stock markets but hedge their exposure to local currencies are a developing trend in the ETF business.
Deutsche Asset & Wealth Management on Monday said it plans to launch the db X-trackers MSCI Germany Hedged Equity Fund (NYSEArca: DBGR), effective May 31.
DBGR is the first ETF designed to provide investors direct exposure to the German equity markets while mitigating exposure to fluctuations between the value of the U.S. dollar and the euro, the firm said.
The Japanese stock rally and plunging yen have put currency-hedged ETFs such as WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP) in focus this year. [Yen-Hedged Japan ETFs]
DBGR joins the db X-trackers suite of hedged equity ETFs that includes DBJP, db X-trackers MSCI EAFE Hedged Equity Fund (NYSEArca: DBEF), db X-trackers MSCI Emerging Markets Hedged Equity Fund (NYSEArca: DBEM) and db X-trackers MSCI Brazil Hedged Equity Fund (NYSEArca: DBBR).
Currency-hedged ETFs outperform when the U.S. dollar strengthens against the local currency, and vice versa.
“U.S. investors are looking for products with built-in protection against fluctuations between the dollar and non-U.S. currencies that also provide pure exposure to equity markets. DBGR is the first ETF focused on Germany that responds to this demand,” said Martin Kremenstein, Deutsche Asset & Wealth Management Americas’ Head of Passive Asset Management.
Deutsche Asset & Wealth Management’s U.S. exchange traded products platform includes 53 ETPs with approximately $12 billion in assets under management.