Currency traders who need to measure their performance versus the U.S. dollar on a hedge basis now have an index to compare to.
FTSE Russell 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 U.S. 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 U.S.
Unlike currency indexes available today which hedge 100% of the U.S. dollar currency exposure of the underlying securities, this new suite of indexes hedges against 50% of the fluctuations between the U.S. dollar and the home currency of the underlying index constituents.
“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,” said Ron Bundy, chief executive office, benchmarks North America, FTSE Russell. “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, 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.
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.
The index creation comes amid investor demand for more diverse currency index measures, according to Russell.
