Daily ETF Watch: SSgA Debuts Hedged Funds

Daily ETF Watch: SSgA Debuts Hedged Funds

State Street launches a pair of currency-hedged ETFs.

Reviewed by: Heather Bell
Edited by: Heather Bell

State Street Global Advisors launched two more currency-hedged ETFs today, which will join its first such fund, the SPDR Euro Stoxx 50 Currency Hedged ETF (HFEZ), which launched in June.

The SPDR S&P International Dividend Currency Hedged ETF (HDWX) is basically the currency-hedged version of the $1.1 billion SPDR S&P International Dividend ETF (DWX | B-56).

The underlying index of the funds is a dividend-weighted benchmark covering the 100 highest-yielding non-U.S. stocks. DWX comes with an expense ratio of 0.45 percent, while HDWX charges three more basis points for the currency hedge, a net expense ratio of 0.48 percent.

The other fund that debuted today, the SPDR MSCI International Real Estate Currency Hedged ETF (HREX), is not a currency-hedged version of an existing SPDR. HREX comes with an expense ratio of 0.48 percent as well.

It tracks the MSCI World ex USA IMI Core Real Estate Capped 100% Hedged To USD Index, which covers developed-market non-U.S. companies that generate 75 percent or more of their revenues from real-estate-related business activities.

Both funds use foreign-currency-forward contracts to hedge away the currency risk associated with non-U.S. stocks.

New Focus 5 Fund Filed

First Trust has filed for a brand-new addition to its Focus 5 series of funds. The First Trust Dorsey Wright Dynamic Focus 5 ETF will join the First Trust Dorsey Wright Focus 5 ETF (FV | C-44) and the First Trust Dorsey Wright International Focus 5 ETF (IFV | D-31).

Both FV and IFV are highly successful funds. The former launched in March 2014 and has $4.3 billion in assets under management, while IFV launched in July 2014 and has $672 million in assets. Both are funds of funds that invest in a portfolio of five other First Trust ETFs that are selected based on relative price momentum and are equal weighted.

The funds’ component lists are reviewed on a weekly basis, with component ETFs replaced should they fall within the bottom half of the relative-strength rankings of the respective selection universes. When an ETF is switched out of the fund, the resulting portfolio is reset to equal weightings.

While FV invests primarily in other sector and niche funds that provide domestic and global coverage, IFV invests in ETFs from First Trust’s lineup of country and regional funds. The proposed “Dynamic” fund will be very similar to FV, but its selection universe will include a “cash proxy” component.

The cash proxy is essentially one- to three-month Treasury bills that are evaluated according to the Dorsey Wright relative strength methodology just like the ETFs in the selection universe. The prospectus notes that the cash proxy can have a weight ranging from zero to 95 percent of the portfolio.

The filing did not include a ticker or fee, but it did indicate that the fund will list on the Nasdaq stock exchange.

ProShares Closes TLL

ProShares has shuttered its ProShares UltraShort Telecommunications ETF (TLL) due to lack of investor interest. The fund saw its last day of trading on Monday and was suspended as of today.

Contact Heather Bell at [email protected].

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.