Some folks believe the euro is overvalued. The International
Monetary Fund said as much in April.
Eurozone exporters have been claiming about the strong
currency for months now. Last week, the common currency hit a
six-month high against the dollar. The CurrencyShares Euro Trust
) is up three percent in the past 90 days.
The strong euro has been particularly problematic for
export-dependent Germany, the Eurozone's largest economy. Already
grappling with the effects of the weak yen, German equities and
ETFs are not helped by a strengthening euro. Over the past three
months, the Vanguard FTSE Europe ETF (NYSE:
) has traded slightly higher, but the iShares MSCI Germany ETF
) has traded slightly lower.
Three ETFs That Could Suffer From A Weak Yen
While Europe ETFs have been recovering, the veracity of that
recovery could be questioned if the euro keeps its perch among
the better-performing developed market currencies. However, if
the European Central Bank can push the euro lower,
there are a few unheralded ETFs
that should benefit, including one specific to Germany.
The db X-trackers MSCI Germany Hedged Equity Fund (NYSE:
) is that play. In a year when currency hedged ETFs
have emerged as a popular way to gain to access
to Japanese stocks
, investors may be forgetting there are hedged plays for
currencies beyond the yen.
DBGR tracks the MSCI Germany U.S. Dollar Hedged Index, which
is "designed to provide exposure to German equity markets, while
at the same time mitigating exposure to fluctuations between the
value of the U.S. dollar and the Euro,"
according to Deutsche Bank
In terms of holdings, DBGR holds many of the familiar,
large-cap German stocks that are found in the rival EWG. That
group includes SAP (NYSE:
), Siemens (NYSE:
) and Deutsche Bank (NYSE:
). Materials is DBGR's largest sector at 24 percent. Consumer
discretionary and financial services names combine for another
Like the other
hedged currency ETFs sponsored by Deutsche
, DBGR can be traded commission-free by investors with E*Trade
However, that is not the only nifty feature DBGR has to offer.
As of the end of June, the MSCI Germany U.S. Dollar Hedged Index
had a dividend yield of 3.38 percent. The ETF made a distribution
of nearly 85 cents a share in July,
according to issuer data
Assuming the dividend is paid just once a year, that still
gives DBGR a solid 3.8 percent dividend yield based on the fund
currently trading around $22. The trailing 12-month yield on EWG
is 1.65 percent.
For more on ETFs, click
Disclosure: Author does not own any of the securities
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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