Roughly one third of Deutsche Bank’s 30 exchange-traded fund (ETF) offerings provide investors with direct exposure to foreign markets, while also engaging in currency hedging to mitigate the risk of fluctuating exchange rates. While the dollar has not been particularly strong for the past decade, unpredictable quantitative-easing moves by both the European Central Bank and the Bank of Japan can affect currency valuations.
One of Deutsche Bank’s ETFs, db X-trackers MSCI EAFE Hedged Equity Fund (DBEF), seeks to reflect the stock performance of developed, non-U.S. economies, while limiting exposure to the fluctuation of strength between the U.S. dollar and other currencies. So far this year, DBEF has seen a small loss of 0.47%, but it has a dividend yield of 1.51%, with its dividends typically paid in June or December. In 2013, DBEF gained 24.30%.
While a currency hedge is not a top investing priority for Americans until the dollar shows signs of strength, Deutsche Bank’s db-Xtrackers hedged currency offerings provide a measure of protection for when that day comes. Until then, Deutsche Bank offers an array of broad-based commodity indices which may be more relevant to today’s market.
Deutsche Bank has a rich history in navigating international markets. For instance, German companies doing business in Shanghai or Chicago need to be able to receive their payments in dollars but issue their Berlin workers’ salaries in euros. When Deutsche Bank was founded in 1870, the euro did not exist, but funds still needed to be exchanged across borders. More than 140 years later, Deutsche Bank has established itself as an ETF provider that offers investors access to a variety of international markets.
If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.
In case you missed them, I encourage you to read my articles from previous weeks about ETF providers ALPS, Direxion, Fidelity, Charles Schwab, Guggenheim, PowerShares, WisdomTree, First Trust, ProShares, Vanguard, iShares and State Street. I also invite you to share your thoughts below.
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