Daily ETF Watch: Source Plans Hedged Fund

October 27, 2014

A recent filing from Source indicates the firm is planning to launch an ETF that will track the movements of the Euro Stoxx 50 Index with a currency hedge overlay.

The Source Euro Stoxx 50 Hedged ETF will invest in the only ETF Source currently has listed on U.S. markets, the Source Euro Stoxx 50 ETF (ESTX), and it will use a one-month currency forward rate to hedge away currency fluctuations of the euro against the U.S. dollar.

The filing didn’t include an expense ratio or a ticker.

Currency-hedged ETFs have become more popular since the success of the WisdomTree Japan Hedged Equity ETF (DXJ | B-65), which received its currency-hedged makeover in 2010. Assets in the fund have soared to nearly $10 billion since then.

There are currently nearly 30 currency-hedged equity ETFs trading, with more than $15 billion in assets under management among them. WisdomTree was followed into the space by Deutsche Bank and iShares.

The main competitor to the fund would be the recently launched iShares Currency Hedged MSCI EMU ETF (HEZU), which also covers the eurozone. HEZU comes with an expense ratio of 0.51 percent, or $51 for each $10,000 invested, and has accumulated roughly $13 million in assets during its nearly four months of trading.

 

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