Nasdaq OMX will disseminate four dividend achievers indexes on Wednesday, June 19. Each index will serve up a different access route into Canadian-currency-denominated dividend-paying stocks. All four indexes will be calculated in Canadian dollars.
To be included in the Nasdaq US Dividend Achievers Select Index-the index on which these four new indexes will provide a play-constituents must have at least a 10-year history of increasing dividend payments.
Currency-hedged investment products have recently gained incredible traction, as with strategies like the one behind the WisdomTree Japan Hedged Equity Fund (NYSEArca:DXJ), which has nearly $10 billion in assets, and has allowed investors a lucrative avenue into international equity markets without the worrisome risk of ever-popular currency easing taking place across the globe.
According to a press release from Nasdaq, the indexes will protect against currency risk thusly:"By selling foreign exchange forward contracts, global investors are able to lock in current exchange forward rates, and manage their currency risk." In doing so, potential losses or gains from the forward contracts will be offset by potential profits or losses in the value of the currency, therefore negating exposure to the currency.
The indexes and their tickers are:
- Nasdaq US Dividend Achievers Select Currency Hedged CAD Index (DVGCADH)
- Nasdaq US Dividend Achievers Select Currency Hedged CAD Total Return Index (DVGTCADH)
- Nasdaq US Dividend Achievers Select CAD Index (DVGCAD)
- Nasdaq US Dividend Achievers Select CAD Total Return Index (DVGCADTR)
The former two-the Nasdaq US Dividend Achievers Select Currency Hedged CAD Index and its Total Return counterpart-will hedge the currency risk involved with international investing by providing 100 percent constituent access without the volatile sting of fluctuating international currency crosses.
The latter two indexes-the Nasdaq US Dividend Achievers Select CAD Index and its Total Return counterpart-won't hedge against currency crosses.
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