Deutsche Bank, begun trading two new Currency-Hedged International Bond ETFs, the Deutsche X-trackers Barclays International Treasury Bond Hedged ETF (BATS: IGVT) and the Deutsche X-trackers Barclays International Corporate Bond Hedged ETF (BATS: IFIX) on Thuesday, October 25, 2016. Here is a synopsis of the new ETFs:
1.
FUND INFORMATION:
| Symbol: IGVT | Exchange: BATS |
| Name: Deutsche X-trackers Barclays International Treasury Bond Hedged ETF | Net Expense Ratio: 0.25% |
FUND OBJECTIVE:
The Deutsche X-trackers Barclays International Treasury Bond Hedged ETF seeks investment results that correspond generally to the performance, before fees and expenses, of the Barclays Global Aggregate Treasury Ex USD Issuer Diversified Bond Index (USD Hedged).
REFERENCE INDEX:
The Barclays Global Aggregate Treasury Ex USD Issuer Diversified Bond Index (USD Hedged) is designed to track the performance of investment grade sovereign debt publicly issued in the developed and emerging markets and denominated in the issuer’s own domestic currency (excluding all securities denominated in U.S. dollars) while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the Underlying Index.
The bonds eligible for inclusion in the Underlying Index are sovereign bonds denominated in one of the following 23 eligible currencies: Canadian dollar, Chilean peso, Mexican peso, euro, British pound, Swiss franc, Czech koruna,Danish krone, Israeli new shekel, Norwegian krone, Polish zloty, Russian ruble, Swedish krona, Turkish lira, South African rand, Japanese yen, Australian dollar, Hong Kong dollar, South Korean won, New Zealand dollar, Singapore dollar, Malaysian ringgit and Thai baht. Additionally, eligible bonds must:
(i) be rated investment grade (Baa3/BBB-/BBB- or higher) using the middle rating of Moody’s Investors Service, Inc. (Moody’s), Fitch, Inc. (Fitch), and Standard & Poor’s Financial Services, LLC (S&P);
(ii) have at least one year remaining term to final maturity as of the rebalancing date;
(iii) have a fixed-rate coupon (including zero coupon);
(iv) be non-convertible and taxable; and
(v) meet certain minimum size requirements based on the issuer’s local currency.
The Underlying Index is reconstituted and rebalanced on a monthly basis. As of June 30, 2016, the Underlying Index was comprised of 1,093 bonds issued by 37 different issuers from the following countries: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Netherlands, New Zealand, Norway, Poland, Russia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, Turkey and the United Kingdom.
The Fund enters into forward currency contracts designed to offset the Fund’s exposure to foreign currencies.
Fund Top Holdings (10/27/16):
| JAPAN (20 YEAR ISSUE) 2.1 9/20/2025 | 7.08 % |
| JAPAN (10 YEAR ISSUE) 1.2 12/20/2020 | 6.25 % |
| MEX BONOS DESARR FIX RT 6.5 6/9/2022 | 5.53 % |
| JAPAN (5 YEAR ISSUE) 0.4 6/20/2018 | 4.98 % |
| GOV’T OF FRANCE 2.25% 05/25/2024 | 3.30 % |
| JAPAN (20 YEAR ISSUE) 1.7 9/20/2032 | 2.93 % |
| UK TSY 3 3/4% 2020 3.75 9/7/2020 | 2.84 % |
| JAPAN (30 YEAR ISSUE) 2.5 3/20/2038 | 2.81 % |
| FRANCE (GOVT OF) 3.75 4/25/2021 | 2.68 % |
| NETHERLANDS GOVERNMENT 7.5 1/15/2023 | 2.52 % |
Fund Top Geographic Exposures (10/27/16):
| JP | 25.32% |
| GB | 8.64% |
| FR | 6.96% |
| NL | 5.80% |
| IT | 5.75% |
| MX | 5.53% |
| AU | 4.88% |
| DE | 4.68% |
| CA | 4.68% |
| BE | 4.61% |
Useful Links:
IGVT Home Page
Category: Bonds> International Bonds> Broad International Treasury
2.
FUND INFORMATION:
| Symbol: IFIX | Exchange: BATS |
| Name: Deutsche X-trackers Barclays International Corporate Bond Hedged ETF | Net Expense Ratio: 0.30% |
FUND OBJECTIVE:
The Deutsche X-trackers Barclays International Corporate Bond Hedged ETF seeks investment results that correspond generally to the performance, before fees and expenses, of the Barclays Global Aggregate Corporate Ex USD Bond Index (USD Hedged).
REFERENCE INDEX:
The Barclays Global Aggregate Corporate Ex USD Bond Index (USD Hedged) is designed to track the performance of investment grade corporate debt publicly issued in developed and emerging markets (excluding all securities denominated in U.S. dollars) in the industrial, utility and financial sectors while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the Underlying Index.
The bonds eligible for inclusion in the Underlying Index must be denominated in one of the following 18 eligible currencies: Canadian dollar, euro, British pound, Swiss franc, Czech koruna, Danish krone, Norwegian krone, Polish zloty, Swedish krona, South African rand, Japanese yen, Australian dollar, Hong Kong dollar, South Korean won, New Zealand dollar, Singapore dollar, Malaysian ringgit and Thai baht. Additionally, eligible bonds must:
(i) be rated investment grade (Baa3/BBB-/BBB- or higher) using the middle rating of Moody’s Investors Service, Inc. (Moody’s), Fitch, Inc. (Fitch), and Standard & Poor’s
Financial Services, LLC (S&P);
(ii) have at least one year remaining term to final maturity as of the rebalancing date;
(iii) have a fixed-rate coupon (including zero coupon), a callable fixed-to-floating rate coupon during the fixed-rate term only, or a step-up coupon that changes according to a predetermined schedule;
(iv) be non-convertible and taxable; and
(v) meet certain minimum size requirements based on the issuer’s local currency.
The Underlying Index is reconstituted and rebalanced on a monthly basis. As of June 30, 2016, the Underlying Index was comprised of 3,450 bonds issued by 732 different issuers from the following countries: Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Iceland, India, Ireland, Israel, Italy, Japan, Jersey Channel Islands, Liechtenstein, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.
The Fund enters into forward currency contracts designed to offset the Fund’s exposure to foreign currencies.
Fund Top Holdings (10/27/16):
| FEDEX CORP 1.625 1/11/2027 | 3.62 % |
| COMMERZBANK AG 0.625 3/14/2019 | 3.55 % |
| GE CAPITAL UK FUNDING UN 4.125 9/13/2023 | 3.04 % |
| INNOGY FINANCE BV 4.75 1/31/2034 | 3.01 % |
| COOPERATIEVE RABOBANK UA 4.75 6/6/2022 | 2.91 % |
| CREDIT AGRICOLE LONDON 3.125 2/5/2026 | 2.85 % |
| SOCIETY OF LLOYD’S 4.75 10/30/2024 | 2.79 % |
| GAS NATURAL FENOSA FINAN 3.875 4/11/2022 | 2.78 % |
| AXA SA 5.25 4/16/2040 | 2.62 % |
| AT&T INC 2.75 5/19/2023 | 2.61 % |
Fund Sector Allocation (10/27/16):
| Financials | 45.76% |
| Consumer Staples | 12.28% |
| Telcos | 7.11% |
| Energy | 6.44% |
| Industrials | 6.12% |
| Utilities | 5.67% |
| Consumer Discritionary | 5.23% |
| Materials | 4.13% |
| Info Technology | 2.44% |
| Real Estate | 2.43% |
Fund Top Geographic Exposures (10/27/16):
| US | 20.32% |
| FR | 15.72% |
| GB | 11.61% |
| DE | 11.44% |
| CA | 7.60% |
| ES | 6.42% |
| NL | 5.37% |
| AU | 4.98% |
| JP | 4.10% |
| IT | 3.81% |
Useful Links:
IFIX Home Page
Category:
ETFtrack Comment:
Here is a comment from Fiona Bassett, Head of Passive Asset Management in the Americas:
“If US interest rates rise, international fixed income may help investors diversify away from concentrated US-rate exposure. Our new suite gives investors access to a variety of bonds on a currency hedged basis within the international space covering the Treasury and investment-grade corporate bond segments of the fixed income market.”