When the U.S. dollar flailed for part of the second quarter, critics were quick to write obituaries for currency hedged exchanged traded funds. Too quick.
Roughly halfway through the third quarter, the WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEArca: DBEF) are still this year’s top two asset-gathering ETFs with combined inflows of about $28.3 billion. A third currency hedged ETF, the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ), ranks among the top 10 ETFs for assets added this year. [Momentum for Currency Hedged ETFs]
“The appeal of currency-hedged ETFs is clear at a time of large currency moves in Switzerland, Japan, the eurozone and China and a sharp rise over the past year in the U.S. dollar that has eaten away at some investors’ overseas returns. Accordingly, many such ETFs have outperformed their unhedged rivals this year,” report Leslie Josephs and James Ramage for the Wall Street Journal.
Indeed, currency hedged ETFs are extending their out-performance of unhedged rivals this year. For example, DXJ has outpaced the iShares MSCI Japan ETF (NYSEArca: EWJ) by 120 basis points. DBEF has topped the iShares MSCI EAFE ETF (NYSEArca: EFA) by nearly 400 basis points while the Deutsche X-Trackers MSCI Europe Hedged Equity ETF (NYSEArca: DBEU) is ahead of the Vanguard FTSE Europe ETF (NYSEArca: VGK) by 360 basis points.
The increased prominence of currency hedged exchange traded funds has been well-documented this year and few issuers are benefiting from that trend in a manner similar to that of Deutsche Asset & Wealth Man (Deutsche AWM), the ETF issuing business of Deutsche Bank.
Deutsche AWM said Monday US X-trackers platform surpassed $20 billion in assets under management and that the firm has improved its market share position to a top-10 ETF provider in the U.S.
With $20 billion in AUM “Deutsche X-trackers platform has increased by approximately 365% since year end, and continues to be among the fastest growing exchange-traded fund (ETF) franchises in the US,” according to a statement issued by the firm. [Currency Hedged ETFs Lift This Issuer]
“Some analysts note the lack of funds that address specific concerns. There are no Chinese currency-hedged equity exchange-traded funds, according to ETF.com, for instance, thanks to factors including the Chinese government’s role in setting the yuan exchange rate,” according to the Journal.
However, a spate of new products have come to market this year. State Street Global Advisors, PowerShares and ProShares have all launched their first currency hedged ETFs in 2015 while WisdomTree, Deutsche AWM and iShares have expanded already large linups.
On July 1, iShares unveiled 11 new currency hedged ETFs while Deutsche added two currency hedged industry funds earlier this year.
WisdomTree Europe Hedged Equity Fund
