iShares has updated regulatory paperwork for its proposed iShares Currency Hedged MSCI Emerging Markets ETF (HEEM), a currency-hedge fund based on the MSCI Emerging Markets Index that will take sundry currency movements off the table.
The new fund will invest directly in the highly liquid and nearly $40 billion iShares MSCI Emerging Markets ETF (EEM | B-99).
Fund sponsors including iShares can be excused for trying to replicate the Midas touch of the now-$11 billion Wisdomree Japan Hedged Equity ETF (DXJ | B-56). After all, it gathered almost $10 billion in fresh assets last year. At the end of the day, the Japan story may be the main reason for DXJ’s success.
But it appears investors may now be suffering from a case of currency-hedged overdose, or a lack of education about what those strategies can accomplish, according to Dennis Hudachek, an ETF specialist at ETF.com, in a recent interview.
Nevertheless, iShares is going forward with its latest proposed fund, which will have exposure to large and midcap companies in China, Greece, India, Indonesia, Qatar, Russia, Thailand, Turkey and the United Arab Emirates, among other emerging markets.
The fund will have an expense ratio of 0.70 percent, or $70 for every $10,000 invested.
However, the fund’s strategy, which includes actively managing a portfolio of corporate bonds from developed and emerging countries as well as sovereign debt with a targeted maturity of two to 10 years, has not changed.
The fund was launched in January 2013 and currently manages just over $7 million. It has an expense ratio of 0.45 percent, or $45 for every $10,000 invested.