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- Underpins investor demand for more diverse currency index measures
- Initially available on FTSE Developed ex-North America, Europe and Japan Indexes
- IndexIQ to use as basis for the first suite of 50% currency-neutral hedged ETFs
FTSE Russell, the global index provider, today announced the launch of the FTSE 50% Hedged Index Series, becoming the first index provider to introduce an index series that is 50% hedged to the US dollar. The new suite of international equity benchmarks is designed to help index users evaluate their currency exposures and hedging strategies when investing outside the US.
Unlike currency indexes available today which hedge 100% of the US dollar currency exposure of the underlying securities, this new suite of indexes from FTSE Russell hedges against 50% of the fluctuations between the US dollar and the home currency of the underlying index constituents. The first three indexes in the FTSE 50% Hedged Index Series will be based on the FTSE Developed ex-North America, FTSE Europe and FTSE Japan Indexes.
Ron Bundy, CEO Benchmarks North America, FTSE Russell, said:
“In recent years currency exposure has become an increasingly important factor in global equity portfolios and our clients are asking for currency hedged benchmarks that go beyond the 100% hedge ratio available today. The FTSE 50% Hedged Index Series is designed to assist our clients in gaining a more complete understanding of the impact of currency in their international equity portfolios and we are excited that IndexIQ has chosen FTSE Russell as they offer 50% currency hedged ETFs to their clients.”
IndexIQ, in partnership with MainStay Investments, a New York Life Company, is launching three new ETFs based on the new series of indexes from FTSE Russell. These will be the first in a series of five new currency ETFs to be launched in the coming months.
Adam Patti, Chief Executive Officer of IndexIQ, said:
“Our research has indicated that 50% hedged portfolios can potentially capture much of the risk reduction benefits of a fully hedged approach, while securing steadier performance, regardless of exchange rate fluctuations. By aligning with FTSE Russell, we can now offer ETFs that allow our clients to position their international equity portfolios in a way that is neither actively bullish nor bearish on the direction of the U.S. dollar or foreign currencies.”
A new FTSE Russell index research paper outlines the challenges facing investors interested in hedging currency exposure in international portfolios. Un-hedged international investing can potentially lead to significant currency exposure while, on the other hand, completely hedging currency exposures does not always result in a neutral currency position. To view this paper and other FTSE Russell research, visit http://www.ftse.com/products/indices/research-reports.
FTSE Russell is a pioneer in smart beta indexes and approximately $132 billion in assets are linked to a smart beta index from FTSE Russell. There are now over 200 ETFs tracking FTSE Russell indexes in North America.
