Deutsche Bank at the end of the month is adding another
currency-hedged equity ETF to its roster, this one focused on
German stocks, beating WisdomTree to the punch by launching its
Germany-focused strategy first.
The db X-trackers MSCI Germany Hedged Equity Fund
(NYSEArca:DBGR) will be the market's first currency-hedged take on
German equities, serving up access to German-listed stocks while
neutralizing exposure to currency fluctuations between the euro and
DBGR is very similar to the WisdomTree Germany Hedged Equity
Fund currently sitting in the regulatory pipeline. Deutsche Bank
might be hoping that a first-to-market status will help with its
asset-gathering goals, if the experience it has had with its
Japan-hedged equity fund "DBJP" is any indication.
Indeed, DBJP has outperformed its WisdomTree counterpart, the
now-$10 billion WisdomTree Japan Hedged Equity Fund (NYSEArca:DXJ)
year-to-date, but DBJP remains a far cry from DXJ's blockbuster
success in terms of total assets. Still, DBJP is now a $90 million
fund, built on net creations of $74 million so far this year.
DBGR is not, however, the very first ETF to tap into German
equities. The iShares MSCI Germany Index Fund (NYSEArca:EWG)-also
linked to an MSCI index-has been around since 1996, and has
accumulated nearly $3 billion in total assets.
The launch could come at a good time for Germany-listed
equities, which struggled earlier this year to shake off the
eurozone debt malaise that's centered on countries like Greece,
Spain and Italy, but that have recently turned around. Germany
remains one of the leading economies in the region.
EWG's returns, for instance, struggled to stay in the black for
much of the first quarter, but the fund has now gained 10.8 percent
in the past month alone, putting year-to-date gains at 6.8
The performance has come despite net outflows of $1.22 billion
since the beginning of the year, according to IndexUniverse's ETF
Peeling off the currency exposure from a portfolio of German
equities, however, would not amount to very significant gains for
Unlike exposure to the Japanese yen, for instance, the 12-month
rolling impact of the euro versus dollar rate adds an extra
percentage point to U.S. investor returns at the moment, according
to IndexUniverse's Currency Impact tool.
Still, the concept is that currency fluctuation can be
detrimental to U.S. investors-mainly when the U.S. dollar rises in
value-and DBGR addresses that.
DBGR will track the MSCI Germany US Dollar Hedged Index, which
comprises large- and midcap companies representing together about
85 percent of Germany's equities universe. The portfolio includes
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