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iShares, the exchange-traded funds (ETF) platform of BlackRock, has expanded its currency-hedged ETF range with the launch of the iShares MSCI Japan USD Hedged UCITS ETF (IPJD) on the London Stock Exchange.
The fund becomes the fourth in its range of Japanese equity currency-hedged funds, with sterling, euro and Swiss franc hedged versions also available.
Linked to a currency-hedged version of the MSCI Japan Index, the fund invests in Japanese equities in a way that seeks to protect investors from the impact of fluctuations between the base currency of the fund – US dollar – and the currency denomination of the underlying investments – yen.
The fund physically holds underlying index securities and uses foreign exchange forward contracts to mitigate currency risk. The ETF is hedged against currency movements on a monthly basis.
Tom Fekete, Head of Product for iShares EMEA, said: “In recent years, the volatility in global currency rates has caused significant swings in the international portfolios of investors. Japan has been attracting new interest in anticipation of positive effects from ‘Abenomics’ but investors are paying closer attention to how they can control currency risk when gaining exposure to this market.”
He added: “Currency hedged ETFs offer efficient and cost-effective exposures to a market in a single transaction, and mean investors do not need to establish and manage currency hedging and overlay processes in-house. This new ETF enables investors to access Japan whilst minimising the impact of movements in the yen – US dollar exchange rate. It brings our suite of equity and fixed income currency-hedged ETFs to 13 and we believe it will prove popular with investors as uncertain market conditions persist.”
The fund has a total expense ratio of 0.64%.