State Street Corp.(NYSE:STT)'s State Street Global Advisors (SSgA), the third-largest U.S. issuer of exchange traded funds, on Tuesday tripled the size of its currency hedged ETF lineup with the introduction of two new, income-generating ETFs focusing on international markets.
The SPDR MSCI International Real Estate Currency Hedged ETF (NYSE: HREX) and the SPDR S&P International Dividend Currency Hedged ETF (NYSE: HDWX) are the two new ETFs from SSgA. HDWX is the currency hedged equivalent of the $1 billion SPDR S&P International Dividend ETF (NYSE:DWX), an ETF that came to market in early 2008.
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The SPDR S&P International Dividend Currency Hedged ETF follows the S&P International Dividend Opportunities USD Hedged Index. Financial services and utilities stocks combine for about 47 percent of the new ETF's weight with telecom stocks chiming in at 16 percent. Australia and the UK combine for over 41 percent of the new ETF's country weight. Those are of the best developed market dividend growth destinations outside of the US.
Boiling HDWX down into simple terms, it holds DWX with a currency hedged overlay, a strategy that other issuers have used with new currency hedged ETFs and one that in some cases has been successful.
The SPDR MSCI International Real Estate Currency Hedged ETF seeks to track the performance of the MSCI World ex USA IMI Core Real Estate Capped 100% Hedged to USD Index. This index is designed to reflect the performance of stocks in the MSCI World ex USA IMI Index that are engaged in the ownership, development and management of specific core real estate property types while minimizing exposure to fluctuations in foreign currencies, said SSgA in a statement.
The MSCI World ex USA IMI Core Real Estate Capped 100% Hedged to USD Index is heavily tilted toward developed markets with the yen, euro, Hong Kong dollar, British pound and the Australian dollar combining for over 82 percent of the index's currency exposure, according to MSCI data.
Both new ETFs charge 0.48 percent per year, or $48 per $10,000 invested.
SSgA launched its first currency hedged ETF, the SPDR EURO STOXX 50 Currency Hedged ETF (NYSE:HFEZ) in June. That ETF, which is the currency hedged answer to the popular, SPDR EURO STOXX 50 ETF (NYSE:FEZ), has $7 million in assets under management.
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