“The search for yield continues to be a pressing need for investors and the addition of HREX and HDWX provides our clients with the ability to better manage currency risk when seeking attractive income-producing opportunities outside of the US,” Ross added.
These types of yield-generating investments may pick up as global investors search out income opportunities after foreign central banks enacted loose monetary policies, similar to what happened in the U.S. markets after the Federal Reserve cut rates.
The new ETFs will utilize foreign currency forward contracts to hedge currency risks. Consequently, these currency hedged ETFs could outperform non-hedged funds if foreign currencies weaken against the U.S. dollar. However, potential investors should be aware that the currency hedged ETFs could underperform non-hedged funds if foreign currencies strengthen or the U.S. dollar depreciates.
The fund provider only has one other currency-hedged product, the SPDR EURO STOXX 50 Currency Hedged ETF (NYSEArca: HFEZ), which acts as the hedged version of the SPDR EURO STOXX 50 (NYSEArca: FEZ). [State Street Gets Into the Currency Hedged ETF Game]
For more information on new fund products, visit our new ETFs category.
Money managers who are looking into constructing their own ETFs may also be interested in attending the second annual ETF Boot Camp in New York later this month. Whether you’re an ETF start-up, fund company, broker dealer, pension plan, endowment, private equity firm, fund board independent director, 401k plan provider or ETF industry executive…this conference is designed for you. This one-of-a-kind event will condense everything you need to know about the inner workings of the ETF business into two days.
Max Chen contributed to this article.