Source Launches Japan And Europe Exporters ETFs

The two funds focus on exporting companies which do well in times of currency weakness.

Editor, Europe
Reviewed by: Rachael Revesz
Edited by: Rachael Revesz

Source has launched two exchange traded funds (ETFs) that track exporting companies in Japan and Europe that tend to do well during domestic currency weakness, allowing investors more exposure to revenue from abroad.

The Source STOXX Eurozone Exporters UCITS ETF (EZEX) and the Source STOXX Japan Exprters UCITS ETF (JPEX) both have annual fees of 0.35 percent, and have currency hedged versions available.

Both funds’ underlying indexes have more exposure to exporting companies than the traditional market cap index. In Japan that exposure is 65 percent. Index constituents are taken from its parent index and the stocks that have at least 50 percent of their revenues earned from abroad are weighted by free-float market cap and the percentage of international revenue. There is a cap per stock of 5 percent.

Peter Thompson, president of Source, who was recently appointed after the departure of Ted Hood, said, "We identified a particular need from our investors to gain more targeted exposure to the topical themes of currency devaluation and quantitative easing; hence these indices focus precisely on those companies in the Eurozone and Japan that have a majority of non-domestic revenues. This could be especially valuable now with both the ECB and Bank of Japan using QE, offering the potential for weaker currencies that is likely to boost exporters’ earnings."

The swap fees are 0.15 percent for the currency hedged eurozone fund, 0.05 percent for the unhedged Japan fund and 0.20 percent for the currency hedged Japan ETF.

Rachael Revesz joined in August 2013 as staff writer. Previously an investment reporter at Citywire, she has a background in writing content for retail financial advisors and has covered a wide range of subjects in finance. Revesz studied journalism at PMA Media, which has since merged with the Press Association. She also holds a B.A. in modern languages from Durham University, as well as CF1 and CF2 financial planning certificates from the CII.