Deutsche Asset & Wealth Management has quickly made a name for itself with the release of innovative ETFs designed to take advantage of international markets. Its Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBX ETF Trust (NYSE:DBEF)) is number two on the list of top year-to-date inflows with over $10.6 billion in new assets.
On Wednesday, Deutsche AWM announced it was expanding its international lineup with the release of the first U.S.-listed ETF to track the JPX-Nikkei 400 Index. This new benchmark seeks to screen high quality Japanese stocks by fundamental factors, including return on equity, cumulative operating profit and market capitalization.
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The New ETF
The Deutsche X-trackers Japan JPX-Nikkei 400 Equity ETF (NYSE: JPN) provides exposure to an unhedged basket of 400 Japanese companies that are primarily dominated by industrial and consumer discretionary sectors.
This new ETF will charge a net expense ratio of 0.40 percent, which is slightly lower than 0.48 percent management fee charged by the well-established iShares MSCI Japan ETF (NYSE:EWJ).
We are seeing key institutions, including the Bank of Japan, adopt the JPX-Nikkei 400 Index as a benchmark for increasing allocations to the Japanese equity markets, and we anticipate our investors will follow suit and seek access to this exciting and new benchmark, said Dodd Kittsley, head of ETF strategy for Deutsche AWM in the Americas.
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A Broader Look
Japanese stocks have been solid this year, with EWJ posting a total return of 17.44 percent through June 23.
In addition, the Deutsche X-trackers MSCI Japan Hedged Equity ETF (DBX ETF Trust (NYSE:DBJP)) has gained 20.85 percent over the same time frame. DBJP is the currency hedged equivalent of EWJ and contains short positions in the Japanese yen alongside a basket of market-cap weighted stocks.
JPN will provide ETF investors with a new dynamic to consider when selecting their single-country exposure with greater emphasis on underlying company fundamentals.
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