DBEF’s constituents can hail from 21 countries, including the following: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.
Among the ETF’s largest country allocations is a combined 12.6% weight to Switzerland and Sweden, two countries with negative rates. France, Germany, the Netherlands and Spain combine for about 26% of DBEF’s weight, giving the ETF ample leverage to the weakening euro.
Japan, nearly 23% of DBEF’s weight, is unlikely alter its QE and low rate policies anytime soon and recent Bank of England meeting minutes reveal a central bank with little desire to rush to higher rates. British stocks account for 18.6% of DBEF’s weight.
The ETF could get some help from the Reserve Bank of Australia later this year. Earlier this month, RBA lowered Australia’s benchmark interest rate by 25 basis points to a record low of 2.25%. RBA’s benchmark cash rate was 4.75% in October 2011. The central bank unveiled 25-basis point cuts at two consecutive meetings later that year. From November 2011 to August 2013, on its way to the 2.5% interest rate, RBA cut rates at eight of 20 meetings. Australian stocks are 7.4% of DBEF’s weight.
Deutsche X-trackers MSCI EAFE Hedged Equity ETF
