Speculation BoE will engage in further stimulus measures sent the pound tumbling to its lowest levels since June against the greenback. As DXJ has shown investors, a falling currency can certainly work in favor of ETFs that hold stocks, particularly of those ETFs hedge currency risk. [Hedged Japan ETF Soars With Nikkei]
DXPS, which charges 0.48% per year, competes directly with the $2.1 billion, 17-year old iShares MSCI United Kingdom ETF (NYSEArca: EWU). EWU, which has a 30-day SEC yield of almost 3.1%, is down 2.3% this year.
Just as DXJ does with the yen, DXPS holds short sterling positions and the latter is home to 140 stocks. The new ETF allocates almost 20% of its weight to staples names and 17% each to financials and energy stocks. Materials and health care stocks also receive double-digit weights. No holding is weighted above 5.3% in DXPS. Top-10 holdings include Vodafone (NYSE: VOD), Royal Dutch Shell (NYSE: RDS-A) and BP (NYSE: BP).
DXPS is up 1.2% since its debut, but Friday is the first day U.S. markets are open since the BoE meeting and this could be the first time investors get to see how the ETF reacts on news that the pound may be in for more downside.
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of DXJ.