One of the firms at the forefront of the currency-hedging wave that has hit the ETF industry, Deutsche Bank, jumped on another hedging trend today with the launch of three fixed-income ETFs that seek to neutralize the impact of interest rates.
With interest-rate increases a looming likelihood later this year, firms like ProShares and iShares have launched fixed-income ETFs that seek to hedge away interest-rate risk, usually by taking a short position in Treasurys. The funds are designed to outperform in a rising-interest-rate environment.
Deutsche Bank rolled out the following today:
- Deutsche X-trackers High Yield Corporate Bond – Interest Rate Hedged ETF (HYIH)
- Deutsche X-trackers Investment Grade Bond – Interest Rate Hedged ETF (IGIH)
- Deutsche X-trackers Emerging Markets Bond – Interest Rate Hedged ETF (EMIH)
The three funds track in-house DBIQ indexes. Although HYIH and IGIH will compete with existing funds launched by ProShares and iShares, EMIH is the first interest-rate-hedged emerging market bond ETF.
HYIH comes with an expense ratio of 0.45 percent, cheaper than the 0.55 percent charged by the iShares Interest Rate Hedged High Yield Bond ETF (HYGH | C-44) and the 0.50 percent charged by the ProShares High Yield – Interest Rate Hedged ETF (HYHG | C-37).
Meanwhile, IGIH charges 0.25 percent, the same as the iShares Interest Rate Hedged Corporate Bond ETF (LQDH | C-32), but less than the ProShares Investment Grade – Interest Rate Hedged ETF (IGHG | C), which comes with an expense ratio of 0.30 percent.
EMIH comes with an expense ratio of 0.50 percent.
Nuveen Files ETF 40-APP
Nuveen Investments, a money management firm with more than $200 billion in assets under management that was acquired by TIAA-CREF late last year, recently filed regulatory paperwork requesting exemptive relief to launch transparent actively managed ETFs.
Nuveen is primarily known for its activities in the municipal bond space, including as an underwriter, but the filing covers equities as well as fixed-income securities. The exemptive relief request seeks permission not just for transparent actively managed ETFs, but for funds that use derivatives and can take short positions, as well as funds of funds.
Nuveen is the subadvisor for seven municipal-bond-focused ETFs issued by State Street Global Advisors through its SPDRs family. However, Nuveen’s filing specifically mentions actively managed funds, and the seven funds it subadvises for SSgA are index-based.
Market Vectors Plans Int’l Moat Fund
Van Eck’s Market Vectors ETF unit has filed paperwork outlining its plans for an international companion to its Market Vectors Morningstar Wide Moat ETF (MOAT | A-46).
MOAT has accumulated $962 million in assets since its launch in April 2012. It tracks an equal-weighted index from Morningstar of 20 companies that Morningstar’s analysts have deemed to have the highest fair value out of a universe of stocks that have achieved sustainable competitive advantages in their respective industries. MOAT has an expense ratio of 0.49 percent, or $49 for every $10,000 invested.
The Market Vectors Morningstar International Moat ETF will use a similar methodology to MOAT’s, but it will cover 50 stocks from non-U.S. developed and emerging markets.
The filing did not include a ticker or expense ratio.