Deutsche launches currency hedged version of global fixed income ETF

Apr 28th, 2016 | By | Category: Fixed Income

Deutsche Asset Management has launched a GBP-hedged share class of its db x-trackers II Barclays Global Aggregate Bond Index UCITS ETF (XBGG) on the London Stock Exchange. The fund provides exposure to the investment-grade global bond market.

The ETF will track the  Barclays Global Aggregate Bond Index, which is a measure of global investment grade debt from twenty-four local currency markets. However, the new share class will hedge the multi-currency risk relative to sterling on a monthly basis, meaning that UK-based investors are less exposed to adverse movements in exchange rates.

Deutsche launch currency hedged share class of global fixed income ETF

The db x-trackers II Barclays Global Aggregate Bond Index UCITS ETF provides exposure to fixed income investment grade government, governmental, supranational, corporate, asset-backed and mortgage-backed securities.

The index tracks the market for government, governmental, supranational, corporate, asset-backed and mortgage-backed securities across the full spectrum of maturities in the BBB to AAA credit rating range, and on a global basis.

“Our ETF tracking the Barclays Global Aggregate Bond Index provides exposure to over 15,000 securities, encapsulating the global investment-grade fixed income market,” commented Michael Mohr, Deutsche Asset Management’s Head of Exchange Traded Product Development, EMEA. “It has attracted significant investment, and now sterling-denominated investors have a GBP-hedged share class they can use if they do not wish to have multi-currency exposure.”

As of 31 March 2016 the index has significant country exposure to the US (37.7%), Japan (18.3%), France (6.2%), the UK (6.2%) and Germany (5.5%). The average yield-to-maturity of the fund is 1.39%, and the duration is 6.71 years.

The ETF’s initial launch was in March 2014. It currently has over £500m in assets under management.

The total expense ratio of the fund is 0.30%.

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