Daily ETF Watch: Hedged HY Bond Fund Debuts

July 30, 2015

iShares debuted a currency-hedged bond fund today. While there are interest-rate-hedged bond ETFs, this is the first to hedge away currency effect. The iShares Currency Hedged Global ex USD High Yield Bond ETF (HHYX) is basically the hedged version of the $240 million iShares Global ex USD High Yield Corporate Bond ETF (HYXU | C).

In fact, HHYX invests primarily in HYXU; at launch, the latter represented nearly all of the former’s portfolio, at 99.8 percent. HYXU basically tracks a Markit index that covers high-yield bonds denominated in euros, British pounds sterling and Canadian dollars. The largest country weighting is Italy at 22.2 percent, followed by the United Kingdom at 15.2 percent and Germany at 14.8 percent.

HHYX comes with a net expense ratio of 0.43 percent, while HYXU charges 0.40 percent.

Long/Short AdvisorShares ETF Closing

AdvisorShares announced that it will be shuttering one of its actively managed funds. The AdvisorShares Accuvest Global Long Short ETF (AGLS | 38) will see its last day of trading on Aug. 7, with liquidation set to occur on Aug. 14.

AGLS is managed by David Garff’s Accuvest Global Advisors. The fund was previously known as the AdvisorShares Mars Hill Global Relative Value ETF (GRV), but was revamped into AGLS in November 2011 after GRV saw significant losses in terms of performance, followed by strong outflows. Still, AGLS never really gathered a lot of assets, hovering around the $13 million mark in recent months.

AGLS has used a long/short approach, taking long positions in ETFs it thinks will outperform and short positions in ones it thinks will underperform based on its top-down geographic model. However, the strategy hasn’t done well over the past few years, despite the global bull market. Pair the poor performance with the fund’s nearly 2 percent expense ratio, and it’s easy to see why it hasn’t accumulated much in the way of assets.

Accuvest also managed the AdvisorShares Accuvest Global Opportunities ETF (ACCU), which closed in January.

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