Daily ETF Watch: Blending Hedges & Income

The latest filing from Deutsche Bank outlines its plans to expand its growing currency-hedged family even further—and in a new smart-beta direction. The regulatory paperwork in question covers four ETFs tracking high-dividend versions of existing MSCI indexes that also hedge away currency risk. Those proposed funds include the following:

• Deutsche X-trackers MSCI All World ex US High Dividend Yield Hedged Equity ETF
• Deutsche X-trackers MSCI EAFE High Dividend Yield Hedged Equity ETF
• Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF
• Deutsche X-trackers MSCI EMU High Dividend Yield Hedged Equity ETF

By adding a smart-beta twist to a currency-hedged equity ETF, Deutsche Bank is combining two of the hottest trends in investing.

Incidentally, the parent indexes of the four funds’ underlying benchmarks are already the basis for four existing currency-hedged Deutsche X-trackers:

• Deutsche X-trackers MSCI All World ex US Hedged Equity ETF (DBAW | C-65)
• Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF | B-73)
• Deutsche X-trackers MSCI Emerging Markets Hedged Equity ETF (DBEM | D-69)
• Deutsche X-trackers MSCI EMU Hedged Equity ETF (DBEZ)

The proposed funds’ benchmarks will target the stocks in their respective parent indexes that display above-average dividend income and quality characteristics relative to the other components in the index. And the fund will buy one-month currency-forward contracts to effect the hedge.

The filing did not include any tickers or expense ratios, but it did note that the funds would list on the NYSE Arca.