Specifically, the four Dynamic Currency Hedged Equity Funds will hedge currency fluctuations in the relative value of the foreign currency against the USD, ranging from 0% to 100% hedge. The underlying index will use quantitative signals to determine the hedge ratio based on interest rate differentials, valuations and relative price momentum of the foreign currencies compared to the USD.
“This approach is designed to limit losses related to currency as the euro depreciates against the U.S. dollar while participating in gains related to currency when the euro appreciates against the U.S. dollar, thereby seeking to have the Fund benefit from such currency movements while reducing the volatility associated with currency returns,” according to the filings.
Moreover, index components are selected and weighted by dividend payments, so companies with larger dividends will have a greater index weight.
For more information on currency hedged strategies, visit our currency hedged ETFs category.
Max Chen contributed to this article.