Deutsche launches currency-hedged corporate bond ETF on Xetra

Mar 8th, 2016 | By | Category: Fixed Income

Deutsche Asset Management, a division of Frankfurt-headquartered Deutsche Bank, has expanded its range of db x-trackers exchange-traded funds with the launch of the EUR-hedged db x-trackers Barclays USD Corporate Bond UCITS ETF (EUR) (Xetra: XDGE).

Deutsche AM launches currency-hedged corporate bond ETF on Xetra Exchange

Deutsche’s newest ETF will appeal to euro-based investors seeing investment-grade international bond exposure with mitigated currency risk.

The ETF is linked to the Barclays USD Liquid Investment Grade Corporate EUR hedged Index, providing access to the performance of fixed interest investment grade corporate bonds denominated in US dollars. The USD-EUR exchange rate risk is hedged.

The bonds are issued by financial, utility or industrial US and non-US companies that meet specific maturity, credit rating and liquidity requirements.

The index is calculated on a total return basis. This means that all interest payments received from bonds are reinvested in the index. The index is reviewed and rebalanced monthly.

To be eligible for inclusion in the index, bonds must be rated investment grade (Baa3/BBB-/BBB- or higher) using the middle rating of Moody’s, Standard & Poor’s, and Fitch.

As of February month-end, the United States contributed 83.5% of constituents to the index, followed by the UK (4.5%), the Netherlands (2.1%), Switzerland (2.0%) and Canada (1.9%). The average duration of bonds in the index is 8.42, with more than three-fifths of bonds having maturities of between 3 and 10 years.

The ETF has a total expense ratio of 0.25%.

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