Daily ETF Watch: Firm To Add Hedged Funds

Daily ETF Watch: Firm To Add Hedged Funds

Recon Capital becomes the latest ETF provider to offer currency-hedged versions of existing funds.

HeatherBell_green_bg
|
Reviewed by: Heather Bell
,
Edited by: Heather Bell

The latest filing from Recon Capital indicates the firm is looking to add currency-hedged versions of its FTSE 100 and DAX 30 ETFs to its lineup. The Recon Capital Currency Hedged FTSE 100 United Kingdom ETF (UKXX) and the Recon Capital Currency Hedged DAX Germany ETF (DAXX) will invest significant portions of their assets in their respective unhedged counterparts, but the proposed funds will also invest in foreign currency forward contracts to hedge away currency fluctuations.

 

The Recon Capital DAX Germany ETF (DAX) launched in October of last year and has nearly $17 million in assets under management. The Recon Capital FTSE 100 ETF (UK) launched at the end of April and has less than $2 million in AUM. With currency-hedged ETFs gathering significant assets over the past 12 months, it’s not surprising that Recon Capital, which only has three U.S.-listed ETFs in all, would explore this particular avenue. After all, the hedged ETFs will drive assets into the original unhedged funds.

 

Plus, by creating hedged versions, investors will have pairs of products that allow them to switch in and out of depending on how the currencies involved are trending or to adjust the degree of hedging by shifting assets between the hedged and unhedged versions as the investor believes is appropriate

 

UKXX and DAXX are slated to list on the Nasdaq stock exchange, but the filing did not specify expense ratios for either one.

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.