Deutsche AM lowers fees for two Xtrackers high dividend ETFs

Feb 16th, 2018 | By | Category: Equities

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Deutsche Asset Management has lowered the expense ratios of two NYSE-listed Xtrackers ETFs within its suite of high-dividend equity funds.

Fiona Bassett, head of passive asset management in the Americas.

Fiona Bassett, global co-head of passive asset management in the Americas.

The expense ratios of the Xtrackers MSCI All World ex-US High Dividend Yield ETF (HDAW US) and the Xtrackers MSCI EAFE High Dividend Yield Equity ETF (HDEF US) have been lowered from 0.45% to 0.20%.

Each fund’s investable universe is screened for companies which offer persistent and sustainable dividends, as well as including filters for quality and price performance of the companies.

HDAW and HDEF target equities listed globally excluding the US or in Europe, Australasia and the Far East, respectively.

Fiona Bassett, Deutsche AM’s global co-head of passive asset management in the Americas, commented, “Driven by historically low bond yields, some investors are looking for alternatives to income-oriented investments. With interest rates globally currently at low levels, equities paying higher dividend rates could be an attractive option to meet ongoing income requirements within portfolios. Relatively high equity market dividends, especially in today’s low rate environment, suggest our suite of dividend-focused ETFs can act as cost-effective supplements or alternatives to income strategies.”

While the funds previously provided currency hedging relative to the US dollar, Deutsche AM has also implemented changes which will see the ETFs begin to track the unhedged versions of their respective indices.

HDAW tracks the MSCI ACWI ex USA High Dividend Yield Index. The index comprises large and mid-cap stocks across 46 developed and emerging markets, excluding the US. The underlying index universe is screened for stocks with above-average and sustainable dividend yields. Additional quality screens are employed to strip out companies with potentially deteriorating fundamentals that could put future dividend payments at risk.

As of 31 January 2018, the index had a dividend yield of 4.42%. It’s largest geographical exposure is to the UK (14.4%), followed by Canada (13.1%), Germany (10.9%), France (9.6%) and China (6.5%). The index is heavily weighted to financials (37.8%), with smaller exposures to consumer discretionary (10.9%), materials (9.6%), energy (9.0%) and utilities (6.1%).

HDEF tracks the MSCI EAFE High Dividend Yield Index. The index is composed of high dividend yielding stocks across developed markets, excluding the US and Canada. As with the ACWI index, the EAFE’s underlying universe of large and mid cap companies is screened for stocks offering sustainable above average dividend payouts to shareholders.

As of 31 January 2018, the index had a dividend yield of 4.60%. Geographically, it has a 24.2% allocation to the UK, 20.6% to Germany, 14.5% to France, 8.3% to Australia and 5.9% to Hong Kong. Its largest sector weighting was financials (25.5%), followed by consumer discretionary (18.8%), materials (11.9%) and utilities (10.0%).

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