Deutsche Asset & Wealth Management (Deutsche AWM), the exchange traded funds arm of German banking giant Deutsche Bank (NYSE: DB), added to its already deep bench of currency hedged ETFs Thursday with the debut of two industry funds.
Although currency hedged funds are experiencing exponential growth, even by the ETF’s lofty standards, to this point issuers have favored regional and single-country solutions, such as the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEArca: DBEF). Currency hedged ETFs, which hold short positions in foreign currencies, such as the euro and yen, along with baskets of international equities, added $26.8 billion in the first quarter. [ETFs Add $36.1B in March]
Deutsche AWM goes beyond regional and single-country currency hedged ETFs with the debuts of the Deutsche X-trackers Dow Jones Hedged International Real Estate ETF (NYSEArca: DBRE) and Deutsche X-trackers S&P Hedged Global Infrastructure ETF (NYSEArca: DBIF). The new ETFs are the first currency-hedged real estate and infrastructure ETFs that allow investors to access global markets, according to a statement issued by Deutsche AWM.
The Deutsche X-trackers S&P Hedged Global Infrastructure ETF holds 74 stocks and allocates over two-thirds of its combined weight to the utilities and industrial sectors. U.S. stocks represent nearly 35.6% of the new ETF’s weight, but all of the fund’s short currency positions are in foreign currencies, including the euro, yen and the dollars of Australia and Canada, according to issuer data.
According to the International Monetary Fund, global economies have been weighed down by the effects of the financial downturn and will likely continue to feel its effects for years to come, reports Anna Yukhananov for Reuters.
However, the IMF is urging countries, notably rich economies, to support demand and investment through infrastructure development. Additionally, the Fund is also advising emerging markets to lift infrastructure spending as well. [Infrastructure ETFs in Focus]
Deutsche AWM’s new currency hedged real estate offering, the Deutsche X-trackers Dow Jones Hedged International Real Estate ETF, tracks the Dow Jones Global ex-U.S. Select Real Estate Securities Total Return Net Index (USD) Hedged. That new ETF holds 122 stocks, none of which are U.S. firms.
DBRE’s largest county weight is almost 21.5% to Japan followed by nearly 15% to the U.K. Australia, France, Canada and Hong Kong also receive double-digit allocations in the new ETF.
Like their U.S. counterparts, international real estate investment trusts (REITs) are embraced by income investors due to stout yields. In fact, REIT yields in Australia, Europe ex-U.K., Hong Kong, Japan, Singapore and the U.K. are higher than 10-year government bond yields in those countries, according to Deutsche data.
DBRE charges 0.48% per year while DBIF charges 0.45%.
Deutsche AWM is one of the fastest-growing issuers of U.S.-listed ETFs with $12.1 billion in U.S. ETF assets as of March 31, a 175% increase from the end of 2014.
DBRE Country Exposures
Illustrations Courtesy: Deutsche Asset & Wealth Management