Xtrackers MSCI EAFE Hedged Equity ETF (ARCA: DBEF)

Xtrackers MSCI EAFE Hedged Equity ETF (ARCA:DBEF), Trade Ideas

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DBEF

CurrencyShares British Pound Sterling Trust

Another Brexit ETF Idea

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Strongest Of The Strong: Another Big Year For The ETF Industry

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SCHW

A New Year&#39;s Gift: More Commission-Free ETFs From Schwab

With Great Britain&#39;s referendum on its future in the European Union slated for late June, there is increasing talk regarding which corners of the UK&#39;s financial markets are vulnerable. That speculation carries over to U.S.-listed exchange-traded funds such as the Guggenheim CurrencyShares British (NYSE: <a class="ticker" href="/stock/fxb#NYSE">FXB</a>) and the iShares MSCI United Kingdom ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/ewu#NYSE">EWU</a>)).
A &ldquo;Brexit,&rdquo; is widely believed to be pound negative, explaining why FXB is down 3.8 percent year-to-date, and is one of this year&#39;s worst-performing developed market currency ETFs.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/02/6612990/heres-how-a-brexit-could-screw-up-the-economy">Here's How A Brexit Could Screw Up The Economy</a></bzrelatedlink>
<h3>Hedging Brexit Chatter Outcomes</h3>
Citigroup suggests several Brexit hedges, including overweighting energy names relative to financials. EWU allocates 21 percent of its weight to the financial services sector and nearly 13 percent to energy names. There is risk in overweighting European energy names, namely a <a href="http://www.benzinga.com/news/16/02/6230655/troubling-news-for-uk-etfs">murky dividend outlook</a> for the UK&#39;s benchmark FTSE 100, which, though it has yet to, could eventually plague <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/02/6254383/brexit-prep-with-etfs">oil majors</a> residing in EWU.
Other ETFs, such as the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>)), could benefit if Brexit comes to pass, particularly if sterling falters but UK equities firm up.
&ldquo;According to a YouGov poll conducted last week, a roughly equal percentage of respondents in the U.K. intend to vote to leave the European Union (EU) as intend to vote to remain; one quarter of them don&#39;t know or will not vote in the June referendum. In anticipation of a possible &#39;Brexit&#39;, the British pound weakened relative to the U.S. dollar in February,&rdquo; said<a href="http://trymsatoday.com/"> S&amp;P Capital IQ</a> in a note out Thursday.
<h3>Why DBEF Deserves A Second Look</h3>
At almost 19.6 percent, the U.K. is DBEF&#39;s second-largest country weight behind Japan. 
&quot;Within consumer staples, large multinationals such as Unilever (UL) and Diageo (DEO) can benefit as a weaker pound generates higher profits. For example, Unilever recorded strong revenue growth of 10 percent in 2015, boosted by a positive currency impact of 6 percent. However, S&amp;P Global Market Intelligence analyst Julien Jarmoszko notes that U.K. supermarkets such as Tesco could be hurt by higher food costs as the pound weakens that they are unable to pass along price increases to customers amid high competition,&rdquo; said S&amp;P Capital IQ.
DBEF allocates over 12 percent of its weight to staples stocks, several of which are British names. The ETF is down 5.6 percent year-to-date, but up 2.8 percent over the past month. 
Image Credit: <a href="https://pixabay.com/en/london-buckingham-palace-buckingham-1211303/">Public Domain</a>

To the surprise of few who follow the industry, exchange traded funds notched another exceptional year of adding assets in 2015. By BlackRock Inc.&nbsp;(NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>)&#39;s count, exchange traded products added $347 billion on a global basis last year.

	New York-based BlackRock <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/01/6108951/ishares-wins-2015-race-for-global-etf-inflows#/null">garnered $130 billion of the $347 billion</a> that flowed into exchange-traded products last year. BlackRock, the world&#39;s largest asset manager, is the parent company of iShares, the world&#39;s largest ETF sponsor.

	&quot;U.S. ETFs gathered $40 billion in the month of December, driving the full year inflows to $242 billion, according to&nbsp;data&nbsp;from etf.com. In 2015, international equity ETFs added more than $109 billion of fresh money while U.S. equity and U.S. fixed income offerings added $61 billion and $56 billion, respectively. S&amp;P Capital IQ thinks this is impressive as the U.S. equity market was down fractionally on a price basis for the year,&quot; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a new research note.
<h3>
	Prominent Theme(s)</h3>

	As Benzinga noted on Tuesday, five of last year&#39;s top 10 asset-gathering ETFs were iShares funds. Another prominent theme last year was investors favoring international equity ETFs, a trend that benefited currency hedged ETFs, such as the WisdomTree Europe Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>). HEDJ was the top asset-gathering ETF last year while only two funds added <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/12/6024693/these-currency-hedged-etfs-could-enjoy-2016">more new assets than DBEF</a>.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/01/6108948/a-glum-view-on-a-high-flying-sector">A Glum View On A High-Flying Sector</a>

	WisdomTree Investments Inc. (NASDAQ: <a class="ticker" href="/stock/wetf#NASDAQ">WETF</a>), &quot;the fifth-largest provider, gathered $16 billion in 2015, the third most in the growing industry. Approximately 82% of WETF&rsquo;s asset growth came from demand for its popular HEDJ. S&amp;P Capital IQ has research on 81 other ETFs offered by WisdomTree including some strong U.S. dividend ETFs, but the firm&rsquo;s success has recently been driven by interest in currency hedged European assets,&quot; said S&amp;P Capital IQ.

	Vanguard, the second-largest U.S. ETF sponsor, was last year&#39;s No. 2 asset gather as the Vanguard S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/voo#NYSE">VOO</a>) and the Vanguard Total Stock Market ETF(NYSE: <a class="ticker" href="/stock/vti#NYSE">VTI</a>) combined to add over $20 billion in new assets. Overall, ETFs issued by Pennsylvania-based Vanguard took in $76.4 billion in new assets last year, according to S&amp;P Capital IQ.

	The ETF industry has been torrid asset-gathering pace, having doubled in size between 2011 and 2014. On the surface, it would appear such a pace would be difficult to maintain. However, some industry insiders believe another double is on the way.

	&quot;Last month, SNL Financial&rsquo;s Matt MacFarland wrote that BlackRock President Robert Kapito said the ETF market &ldquo;in the next three to four years is going to double in size&rdquo;, drawing a comparison between the rise in ETFs and that of mutual funds in the 1970s,&quot; according to S&amp;P Capital IQ.

Investors love a good deal, and exchange-traded funds, broadly speaking, deliver the goods when it comes to good deals. Low fees have been one of the biggest reasons advisors and investors continuously flock toward ETFs, but ETF users have other avenues for cutting costs &ndash; including commission-free trading platforms.
Charles Schwab Corp (NYSE: <a class="ticker" href="/stock/schw#NYSE">SCHW</a>)'s Schwab ETF OneSource is the largest commission-free ETF platform, and in terms of number of offerings, it just keeps on growing.
On Monday, California-based Schwab said it is adding two new providers &ndash; Deutsche Bank AG (USA) (NYSE: <a class="ticker" href="/stock/db#NYSE">DB</a>)'s Deutsche Asset &amp; Wealth Management (Deutsche AWM) and John Hancock Investments &ndash; and 14 new ETFs.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/12/6085097/a-new-etf-avenue-to-europe">A New ETF Avenue To Europe</a></bzrelatedlink>
Two Guggenheim ETFs, the Guggenheim BulletShares 2025 Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/bscp#NYSE">BSCP</a>) and the Guggenheim BulletShares 2023 High Yield Corporate Bond ETF (NYSE: BSJN), also joined Schwab ETF OneSource.
&ldquo;Deutsche Asset Management and John Hancock Investments are the 15th and 16th providers to join Schwab ETF OneSource, adding to a roster of existing industry leaders that include: ALPS, Direxion, ETF Securities, Global X Funds, Guggenheim Investments, IndexIQ, J.P. Morgan Asset Management, PIMCO, PowerShares, ProShares, State Street SPDR&reg; ETFs, United States Commodity Funds LLC, WisdomTree and Charles Schwab Investment Management,&rdquo; <a href="https://www.csimfunds.com/public/csim/home/products/exchange_traded_funds">said Schwab</a> in the statement.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/12/6076843/investors-are-flocking-to-this-new-etf">Investors Are Flocking To This New ETF</a></bzrelatedlink>
<h3>New To ETF OneSource</h3>
The following Deutsche AWM ETFs are joining the ETF OneSource platform:
<ul>
<li>Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>))</li>
<li>Deutsche X-trackers MSCI Emerging Markets Hedged Equity Fund (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbem#NYSE">DBEM</a>))</li>
<li>Deutsche X-trackers MSCI Eurozone Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbez#NYSE">DBEZ</a>)</li>
<li>Deutsche X-trackers MSCI All World ex US Hedged Equity ETF (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbaw#NYSE">DBAW</a>))</li>
<li>Deutsche X-trackers MSCI All World ex US High Dividend (NYSE: HDAW)</li>
<li>Deutsche X-Trackers Municipal Infrastructure Revenue Bond Fund (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/rvnu#NYSE">RVNU</a>))</li>
</ul>

 Six John Hancock ETFs, each of which came to the market <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5914739/examining-the-helpfulness-of-hancocks-etfs">last year</a>, are being added to Scwhab ETF OneSource.
 That group includes:

<ul>
<li>John Hancock Multifactor Technology ETF (NYSE: <a class="ticker" href="/stock/jhmt#NYSE">JHMT</a>)</li>
<li>John Hancock Multifactor Healthcare ETF (NYSE: <a class="ticker" href="/stock/jhmh#NYSE">JHMH</a>)</li>
<li>John Hancock Multifactor Financials ETF (NYSE: <a class="ticker" href="/stock/jhmf#NYSE">JHMF</a>)</li>
<li>John Hancock Multifactor Consumer Discretionary ETF (NYSE: <a class="ticker" href="/stock/jhmc#NYSE">JHMC</a>)</li>
</ul>

As of September 30, 2015, Schwab ETF OneSource has $44 billion in assets under management and 201 flows into ETFs in the program are $9 billion, according to Schwab.
Image Credit: <a href="https://pixabay.com/en/sylvester-new-year-s-day-fireworks-1097596/">Public Domain</a>

A New Year's Gift: More Commission-Free ETFs From Schwab

Several years ago, currency-hedged exchange-traded funds were viewed as niche concepts. These days, ETFs that provide equity exposure while profiting from the dollar&#39;s strength against currencies ranging from the euro to the yen and many more are mainstream.
Led by the WisdomTree Inter Hedged Eq Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>)), currency-hedged ETFs are among this year&#39;s most prolific asset gatherers, extending the rapid growth of this ETF genre. Year-to-date, HEDJ and DBEF are the top two asset-gathering ETFs with combined inflows of over $27.5 billion.
Those figures suggest advisors and investors are embracing currency-hedged ETFs at a fevered pace. Staggering growth for HEDJ, DBEF and other currency-hedged ETFs confirm that these funds can in fact be cornerstones of well-diversified portfolios.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/12/6024693/these-currency-hedged-etfs-could-enjoy-2016">These Currency-Hedged ETFs Could Enjoy 2016</a></bzrelatedlink>
<h3>Currency-Hedged ETFs</h3>
Currency-hedged ETFs &ldquo;use currency forwards to hedge their foreign-currency exposure, and this cost to hedge can be roughly estimated as the difference in short-term rates between the U.S. dollar and a foreign currency. During the last five years, the cost to hedge (by using forwards) has been very small, averaging about 10 basis points a year,&rdquo; according to a recent <a href="http://news.morningstar.com/articlenet/article.aspx?id=733408">Morningstar</a> note.
DBEF follows the MSCI EAFE US Dollar Hedged Index. Importantly, DBEF has been superior on a <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5881636/a-king-among-currency-hedged-etfs">risk-adjusted basis</a> as well.
Diverging developed market monetary policies increase DBEF&#39;s allure. Some investors are still betting the Fed will again raise interest rates in the coming months, perhaps as soon as this month. Conversely, the Bank of Japan and the European Central Bank are seen as having the room to add to their already massive easing programs. Combined, Japan and the eurozone account for over 45 percent of DBEF&#39;s geographic weight.
<h3>Other Currency-Hedged Funds To Watch</h3>
DBEF has easily outpaced traditional EAFE funds this year. In addition to HEDJ and DBEF, some other currency hedged ETFs could shine next year as developed market monetary policies continue diverging. If the Bank of England moves to pare rates, the Deutsche X-Trackers MSCI United Kingdom Hedged Equity ETF (DBX ETF Trust (NYSE: DBUK)) and the WisdomTree United Kingdom Hedged Equity Fund (WisdomTree Trust (NASDAQ: <a class="ticker" href="/stock/dxps#NASDAQ">DXPS</a>)) could shine.
Previously, currency traders believed the Bank of England would be one of the first developed market central banks after the<a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5881636/a-king-among-currency-hedged-etfs"> Federal Reserve</a> to raise interest rates, but wagers to that effect have dwindled. Now, with the Fed poised to raise rates and the Bank of England on hold, calling for further pound weakness is not a stretch. However, <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/12/6024693/these-currency-hedged-etfs-could-enjoy-2016">that does not mean</a> DBUK and DXPS are sure things heading into 2016.
<h3>The Complicated Nature Of Hedging</h3>
&ldquo;Currency-hedged ETFs use currency forwards to hedge their foreign-currency exposures, and there are tax issues related to these derivatives contracts. Currency-hedged funds must distribute to fundholders the gains on currency forwards, which are taxed at a combination of long-term and short-term capital gains rates (60 percent long-term and 40 percent short-term).
&ldquo;During periods when the U.S. dollar is rising against hedged currencies, the monthly roll of these currency contracts can result in capital gains,&rdquo; added Morningstar.
Image Credit: <a href="https://pixabay.com/en/europe-pay-usa-banknote-business-69527/">Public Domain</a>

Federal Reserve

DXPS

Portfolio Building With Currency-Hedged ETFs

Broadly speaking, this has been a banner year for currency hedged exchange-traded funds. If they were not already, currency hedged ETFs have gone mainstream thanks in large part to the fact that no ETFs have matched the asset-gathering proficiency of the WisdomTree Inter Hedged Eq Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) or the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>)) this year.
As their names imply, HEDJ and DBEF are multi-country funds. Looking at single-country currency hedged ETFs, particularly when excluding Japan funds, reveals varying degrees of success. For example, this has been a trying year for U.K. ETFs that hedge pound/dollar risk.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5976375/flexshares-enters-currency-hedged-etf-fray">FlexShares Enters Currency Hedged ETF Fray</a></bzrelatedlink>
	Despite the fact that the CurrencyShares British Pound Sterling Trust (Guggenheim CurrencyShares British (NYSE: <a class="ticker" href="/stock/fxb#NYSE">FXB</a>)) has lost 3.3 percent year-to-date, the Deutsche X-Trackers MSCI United Kingdom Hedged Equity ETF (DBX ETF Trust (NYSE: DBUK)) and the WisdomTree United Kingdom Hedged Equity Fund (WisdomTree Trust (NASDAQ: <a class="ticker" href="/stock/dxps#NASDAQ">DXPS</a>)) are off an average of 5.7 percent.
<h3>Looking Into The New Year</h3>
There are indications that 2016 could bring better tidings for DBUK and DXPS, including FXB&#39;s 90-day loss of nearly 2 percent. Sterling's recent bout of weakness has some market observers calling for much more of the same next year.
&ldquo;With a prediction the pound will weaken a further 15 percent by the end of next year, Deutsche Bank AG is among the biggest skeptics. The second-largest foreign-exchange trader sees sterling sliding to a level unseen since 1985, the year the Plaza Accord was signed,&rdquo; according to <a href="http://www.bloomberg.com/news/articles/2015-12-03/pound-headed-to-30-year-low-for-deutsche-bank-as-risks-multiply">Bloomberg</a>.
<h3>Central Banking Influence</h3>
Previously, currency traders believed the Bank of England would be one of the first developed market central banks after the<a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5881636/a-king-among-currency-hedged-etfs"> Federal Reserve</a> to raise interest rates, but wagers to that effect have dwindled. Now, with the Fed poised to raise rates and BoE on hold, calling for further pound weakness is not a stretch. However, that does not mean DBUK and DXPS are sure things heading into 2016.
<h3>DBUK And DXPS Into 2016</h3>
Both ETFs could use a rebound in oil prices, which does not appear likely to materialize, to move higher. DBUK has an almost 13 percent weight to the energy sector, while DXPS devotes 15.8 percent of its weight to energy stocks. In both cases, Royal Dutch Shell plc (ADR) (NYSE: <a class="ticker" href="/stock/rds-a#NYSE">RDS-A</a>) and BP plc (ADR) (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>) are major holdings.
Other names in both ETFs that U.S. investors are likely to be familiar with due to New York listings include AstraZeneca plc (ADR) (NYSE: <a class="ticker" href="/stock/azn#NYSE">AZN</a>), HSBC Holdings plc (ADR) (NYSE: <a class="ticker" href="/stock/hsbc#NYSE">HSBC</a>) and Vodafone Group Plc (ADR) (NASDAQ: <a class="ticker" href="/stock/vod#NASDAQ">VOD</a>).
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5979123/fed-preparation-with-currency-hedged-etfs">Fed Preparation With Currency Hedged ETFs</a></bzrelatedlink>
 Still, DBUK and DXPS are responsive to pound weakness. As FXB has slid lower over the past three months, the two currency hedged ETFs are up an average of 3.2 percent over that period. The pair could also rally into year-end if options traders are correct.
&ldquo;Options also suggest the pound will extend its 4 percent decline versus the greenback this year. The difference between the cost of three-month contracts allowing traders to sell the pound versus the dollar and those to buy widened to a five-month high of 0.88 percentage point, from as little as 0.26&nbsp;percentage point in mid-October,&rdquo; according to Bloomberg.
Image Credit: <a href="https://pixabay.com/en/coins-money-ruble-salary-map-990693/">Public Domain</a>

Short Ideas

HSBC

RDS-A

These Currency Hedged ETFs Could Enjoy 2016

Advisors and investors are hearing plenty about the growth of smart or strategic beta exchange-traded funds. New data confirm these ETFs, which toe the line between active and passive management, are growing at a blistering pace.
<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5871033/the-survey-says-advisors-love-smart-beta-etfs">According to FTSE Russell&rsquo;s</a> first U.S. retail financial advisor market survey "<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">Smart Beta:</a> 2015 survey findings from U.S. financial advisors," 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using multiple strategic beta approaches.
<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">A recent survey</a> by Create-Research found that smart beta ETFs account for <a href="http://www.etftrends.com/2015/08/rapid-growth-in-the-smart-beta-index-etf-space/">over $300 billion</a>, or 18 percent of the U.S. ETF market, by far the largest ETF market in the world.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/6006877/going-shopping-with-an-emerging-markets-consumer-etf">Going Shopping With An Emerging Markets Consumer ETF</a></bzrelatedlink>
<h3>Strategic, Smart Beta ETFs</h3>
Exponential growth for strategic beta ETFs has continued in 2015 despite outflows from some dividend ETFs. Dividend ETFs had previously been the primary drivers of smart beta growth, but that has changed this year. Advisors and investors have pulled assets from some marquee dividend ETFs due to speculation the Federal Reserve is close <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5774526/utilities-resurgence-helps-some-dividend-etfs-inflows-a-diffe">to raising interest rates</a> for the first time in nine years.
&ldquo;Smart Beta equity ETFs/ETPs listed globally gathered US$ 3.0 billion in new assets in October and US$ 53.7 billion in the first 10 months of 2015. There were 764 smart beta equity ETFs/ETPs, with 1,336 listings, assets of US$399 billion, from 106 providers listed on 31 exchanges in 27 countries, according to ETFGI&rsquo;s new report the Global Smart Beta ETF and ETP Insights report for October 2015,&rdquo; <a href="http://etfgi.com/news/detail/newsid/758">according to ETFGI</a>, a London-based ETF research firm.
Excluding two currency hedged ETFs &ndash; WisdomTree Inter Hedged Eq Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) and the DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>) &ndash; the rest of this year&#39;s top asset-gathering equity ETFs are cap-weighted funds. However, there are plenty of examples of factor-based and smart beta ETFs packing on the assets. 
<h3>Factor-Based, Smart Beta ETFs</h3>
That group includes the WisdomTree U.S. Quality Dividend Growth Fund (WisdomTree Trust (NASDAQ: <a class="ticker" href="/stock/dgrw#NASDAQ">DGRW</a>)), iShares MSCI USA Momentum Factor ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/mtum#NYSE">MTUM</a>)) and new funds such as the PowerShares DWA Tactical Sector Rotation Portfolio (NASDAQ: <a class="ticker" href="/stock/dwtr#NASDAQ">DWTR</a>). DWTR has needed less than two months of trading to become an <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5954100/some-momo-from-a-new-momentum-etf"> $84 million ETF</a>. 
&ldquo;Products which are categorised as smart beta based only on the fact that the index uses an alternative weighting methodology have $22.7 billion assets across 84 products, while those utilising volatility screens such as filtering for securities with low volatility have 63 products and $26.4 billion assets. There were also 28 products based on momentum strategies with $10.6 billion assets,&rdquo; according to ETFGI.
WisdomTree Investments, Inc. (NASDAQ: <a class="ticker" href="/stock/wetf#NASDAQ">WETF</a>) is the top asset gatherer among smart issuers year-to-date, followed by iShares, the world&#39;s largest issuer of ETFs. 
The author owns shares of DGRW.
Image Credit: <a href="https://pixabay.com/en/macbook-laptop-computer-office-924157/">Public Domain</a>

Dividends

DGRW

DWTR

MTUM

Smart Beta ETFs Are Growing At A Staggering Pace

Currency hedged exchange-traded funds, one of this year&#39;s fastest growing and most prolific asset-gathering segments of the ETF universe, are continuing that rapid population growth as more issuers enter the fray.
<h3>Newcomers On Deck</h3>
That includes Northern Trust Corporation (NASDAQ: <a class="ticker" href="/stock/ntrs#NASDAQ">NTRS</a>)'s FlexShares unit, which launched its first two currency hedged ETFs this week. Those new ETFs are the FlexShares Currency Hedged Morningstar DM ex-US Factor (NYSE: TLDH) and the FlexShares Currency Hedged Morningstar EM Factor Tilt (NYSE: TLEH).
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5976186/new-etf-goes-global-for-small-cap-dividends">New ETF Goes Global For Small-Cap Dividends</a></bzrelatedlink>
Dollar strength in anticipation of higher interest has fueled a massive influx of assets to currency hedged ETFs, putting three such funds &ndash; the WisdomTree Inter Hedged Eq Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>), Deutsche X-Trackers MSCI Europe Hedged Equity ETF (DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>)) and the WisdomTree Japan Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/dxj#NYSE">DXJ</a>) &ndash; among this year's <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5881636/a-king-among-currency-hedged-etfs"> top asset-gathering ETFs</a>.
<h3>Currency And Strategy</h3>
&ldquo;Currency fluctuations, however, add complexity when implementing an international strategy, especially during times of monetary intervention. By hedging the currency exposure in a tilted strategy, the resulting portfolio may provide optimal exposure while reducing potential volatility from currency fluctuations,&rdquo; said Shundrawn Thomas, head of Northern Trust&#39;s Funds and Managed Accounts Group,<a href="http://www.businesswire.com/news/home/20151110005333/en/FlexShares-Launches-Currency-Hedged-Factor-Tilt-Index"> in a statement</a>.
<h3>A Closer Look At The New Names</h3>
The FlexShares Currency Hedged Morningstar DM ex-US Factor Tilt Index Fund and the FlexShares Currency Hedged Morningstar EM Factor Tilt Index Fund represent additions to FlexShares already successful lineup of factor tilt ETFs, a roster that includes the FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (Flexshares Trust (NYSE: <a class="ticker" href="/stock/tltd#NYSE">TLTD</a>)) and the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (Flexshares Trust (NYSE: <a class="ticker" href="/stock/tlte#NYSE">TLTE</a>)).
The FlexShares Currency Hedged Morningstar DM ex-US Factor Tilt Index Fund can be used as a strategic beta replacement for traditional capitalization-weighted international equity funds by investors looking for small-cap and value tilts.
 At the country level, that new ETF is dominated by Japan and the UK, which combine for over 45 percent of the fund&#39;s weight. TLDH allocates over a quarter of its sector weight to financial services names, with industrials and consumer discretionary combining for another 30 percent, <a href="https://www.flexshares.com/exchange-traded-funds/currency-hedged-morningstar-dm-ex-us-factor-tilt-index-fund">according to FlexShares data</a>.
At a time when emerging markets' currencies are flailing against the dollar and a Federal Reserve rate hike could exacerbate that situation, the FlexShares Currency Hedged Morningstar EM Factor Tilt Index Fund could be particularly alluring for investors looking to wager on a rebound for developing world equities.
Like TLDH, TLEH features small-cap and value tilts. The currency hedged emerging markets ETF&#39;s country allocations are decidedly low beta, as China stocks listed in Hong Kong, South Korea and Taiwan combine for over half of the new ETF&#39;s country weight. Financials are over a quarter of TLEH&#39;s sector weights with industrials and consumer discretionary combining for another 28 percent.
Image Credit: <a href="https://pixabay.com/en/money-euro-earth-world-continents-965060/">Public Domain</a>

Emerging Markets

Small Cap Analysis

WisdomTree Trust Japan Total Dividend Fund

NTRS

TLTD

TLTE

FlexShares Enters Currency Hedged ETF Fray

Despite global volatility and a lack of clarity regarding when the Federal Reserve will raise interest rates, U.S.-listed exchange-traded funds continue to gather assets at breakneck speed.

	After adding $19 billion last month, exchange-traded products trading in the United States, including ETFs and exchange-traded notes (ETNs) have hauled in $145 billion in new assets through the first nine months of this year &ndash; a record for that time frame, according to <a href="http://etfgi.com/news/detail/newsid/686">ETFGI</a>, a London-based ETF research firm.&nbsp;

	Last month, fixed-income ETFs were the dominant asset gatherers, accounting for half of the month&#39;s inflows after the Federal Reserve declined to boost borrowing costs following its September meeting. During the third quarter, five of the top 10 asset-gathering ETFs <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5905516/forget-the-fed-investors-are-loving-bond-etfs">were bond funds</a>, a quintet that includes the iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE: <a class="ticker" href="/stock/tlt#NYSE">TLT</a>),iShares Short Treasury Bond Fnd (NYSE: <a class="ticker" href="/stock/shv#NYSE">SHV</a>) and the SPDR Lehman 1-3 Month T Bill (ETF) (NYSE: <a class="ticker" href="/stock/bil#NYSE">BIL</a>). 
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5928973/yes-this-equal-weight-etf-really-works">Yes, This Equal-Weight ETF Really Works</a></bzrelatedlink>
<h3>Asset-Gathering ETF Trend</h3>
That data jibes with recent data from Charles Schwab Corp. (NYSE: <a class="ticker" href="/stock/schw#NYSE">SCHW</a>). The seventh-largest U.S. ETF issuer said in its <a href="http://www.benzinga.com/news/15/10/5926084/charles-schwab-continues-etf-ascent">Schwab Third-Quarter Snapshot</a> that half of the third-quarter inflows across its ETF platform were allocated to bond funds.
That trend is continuing again in the fourth quarter as four of the top five asset-gathering ETFs and five of the top 10 are fixed income funds. In the current quarter, investors are favoring corporate bond funds, including high-yield fare, such as the SPDR Barclays Capital High Yield Bnd ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>), the second-largest junk bond ETF.
&ldquo;YTD through the end of September 2015, ETFs/ETPs have gathered record net inflows of US$145.4 billion. Equity ETFs/ETPs gathered the largest net inflows YTD with US$91.6 billion, followed by fixed income ETFs/ETPs with US$38.9 billion and commodity ETFs/ETPs with US$1.1 billion,&rdquo; according to ETFGI.
<h3>Leaders In Asset-Gathering</h3>
BlackRock, Inc. (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>)'s iShares was the top asset gatherer among ETF issuers last month, followed by State Street Corp (NYSE: <a class="ticker" href="/stock/stt#NYSE">STT</a>) State Street Global Advisors.
&ldquo;iShares gathered the largest net ETF/ETP inflows YTD with US$58.2 billion, followed by Vanguard with US$52.8 billion, WisdomTree Investments, Inc. (NASDAQ: <a class="ticker" href="/stock/wetf#NASDAQ">WETF</a>) with US$19.6 billion, Deutsche Bank with US$16.4 billion, and Schwab ETFs with US$9.8 billion in net inflows,&rdquo; noted ETFGI.
<h3>Forerunners</h3>
Half of the top 10 asset-gathering ETFs on a year-to-date basis are iShares funds, while three are Vanguard funds. The other two, the top two in fact, are currency hedged ETFs sponsored by WisdomTree and Deutsche Bank. The WisdomTree Europe Hedged Equity Fund (WisdomTree Inter Hedged Eq Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>)) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF ( DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>)) have added over $27.5 billion in new assets combined this year.
Image Credit: <a href="https://pixabay.com/en/cigarettes-ashtray-money-621346/">Public Domain</a>

Sector ETFs

Pre-Market Outlook

iShares Trust Barclays 20+ Year Treasury Bond Fund

Year-To-Date ETF Inflows Jump To A Record $145 Billion

There is a reason the WisdomTree Europe Hedged Equity Fund (NYSE: <a href="http://www.benzinga.com/stock/hedj#NYSE">HEDJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a href="http://www.benzinga.com/stock/dbef#NYSE">DBEF</a>) are the top two asset-gathering ETFs this year, having added more than $27.7 billion in new assets combined.

	There is a reason why the PowerShares DB US Dollar Index Bullish Fund (NYSE: <a class="ticker" href="/stock/uup#NYSE">UUP</a>) and the WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSE: <a class="ticker" href="/stock/usdu#NYSE">USDU</a>) are up an average of 3 percent, making the pair two of the best-performing currency ETFs. The reason is essentially the same. Earlier this year, traders bid the dollar higher in advance of the Federal Reserve raising interest rates, something the central bank&nbsp;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5867634/the-currency-hedged-etf-love-affair-continues">obviously has yet to do</a>.
<h3>
	Major Slump</h3>

	As market participants have had to re-calibrate rate hike expectations, the aforementioned dollar ETFs have slumped, posting negative returns over the past 90 days. Likewise, currency hedged ETFs, at least for the moment, are no longer the toast of ETF Town. There was a point earlier this year when four of the top 10 asset-gathering ETFs were currency hedged funds. That number has subsequently been reduced to two: HEDJ and DBEF.

	For dollar bulls and fans of currency hedged ETFs alike, there is potentially good news and it is perhaps the best variety: The kind that few are discussing. Better yet, those good tidings do not prompt investors to continue trying to find a crystal ball that reveals exactly when the <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5905516/forget-the-fed-investors-are-loving-bond-etfs">Fed is going to raise rates</a>.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5913287/returning-to-industrial-etfs">Returning To Industrial ETFs</a>

	Remember all those Treasuries and mortgage-backed securities (MBS) the Fed bought to fuel its various iterations of quantitative easing? Those assets are coming due starting in 2016 and that could prompt some non-rate hike Fed tightening that spurs the dollar higher.

	&quot;In 2016, and in the following years, there will be about $500bn of assets maturing on the balance sheet per year between US Treasuries and Mortgage-Backed Securities (MBS), which is the equivalent of draining about half of the assets added to the balance sheet in 2013. This will be very US dollar positive. Effectively, it is the equivalent of the Fed going into the FX marketplace and making a block purchase of US dollars,&quot; said <a href="http://rareviewmacro.com/">Rareview Macro</a> founder Neil Azous in a note out Wednesday.

	As Azous points out, over the past 90 days, the three best-performing major currencies against the dollar are the euro, yen and Swedish krona. That is not good for any of the aforementioned ETFs. Euro and yen strength are particularly punishing for HEDJ, USDU and UUP. Additionally, DBEF can be pinched by euro and krona strength.

	The Market Vectors-Renminbi/USD ETN (NYSE: <a href="http://www.benzinga.com/stock/cny#NYSE">CNY</a>) has not been a slouch either, despite the Peoples Bank of China&#39;s best efforts. CNY is up 1.5 percent over the past month. More good news for dollar and currency hedged ETFs: Those funds do not necessarily need the Fed to boost rates. Other central banks adding to already substantial QE efforts will do just fine.

	&quot;Add in the idea that the BoJ, ECB, and PBoC will have to ease further to weaken their currencies and remain competitive, and there is a floor for the US dollar. Outside of what is being priced into the fixed income market and the potential shift in the monetary policy dynamic, ultimately we are not far from it,&quot; said Azous.

Morgan Stanley Market Vectors Renminbi/USD ETN

USDU

PowerShares DB US Dollar Index Bullish Fund

The Strong Dollar Catalyst No One Is Talking About

Few exchange traded funds have benefited from the currency-hedged boom in similar fashion to the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>). Year-to-date, only one ETF has added more new assets than the $13.1 billion hauled in by DBEF.

	Inflows to this year&#39;s eighth-, ninth- and 10th-best asset-gathering ETFs would have to be added up to arrive at a sum that exceeds DBEF&#39;s 2015 inflows. Although the Federal Reserve eschewed raising interest rates following its September meeting, punishing the dollar in the process, DBEF has kept its momentum going. The ETF added nearly $2.4 billion in new assets during the third quarter, tops among currency hedged funds and a total <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5867634/the-currency-hedged-etf-love-affair-continues">exceeded by just four other ETFs</a>.&nbsp;

	&ldquo;Prior to 2015, DBEF had minimal assets despite launching in late 2011. We think interest in DBEF is the result of investor attention on the U.S. dollar strength in 2015 relative to the euro and other major currencies. The ETF holds securities in major developed markets, but hedges out the impact (favorable or unfavorable) of the local currencies and tracks a US dollar hedged index,&rdquo; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a note out Thursday.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5879071/delving-deeper-into-strategic-beta-etfs">Delving Deeper Into Strategic-Beta ETFs</a>

	The research named DBEF its focus ETF for October. DBEF is worthy of that designation when considering the ETF has traded modestly higher over the past year while the unhedged MSCI EAFE Index has tumbled more than 8 percent. DBEF follows the MSCI EAFE US Dollar Hedged Index. Importantly, DBEF has been superior on a risk-adjusted basis as well.

	&ldquo;DBEF also ranks favorably to S&amp;P Capital IQ for a number of ETF level attributes. The ETF&#39;s standard deviation at the end of August of 9.7 is modest and is 15% lower than EFA. Meanwhile, the ETF has a 0.35% expense ratio and trades with a relatively tight bid/ask spread. Over the last three months, DBEF has traded 4.7 million on a daily basis,&rdquo; said S&amp;P Capital IQ.

	Diverging developed market monetary policies increase DBEF&#39;s allure. Some investors are still betting the Fed will raise interest rates in the coming months, perhaps as soon as this month. Conversely, the Bank of Japan and the European Central Bank are seen as having the room to add to their already massive easing programs. Combined, Japan and the Eurozone account for over 45 percent of DBEF&#39;s geographic weight.

	That does not include DBEF&#39;s solid exposure to Nordic countries, some of which have room to lower rates. In fact, Norway, which is featured in DBEF, recently did just that.

	&ldquo;Eurozone GDP growth was slightly slower in the second quarter (0.4%), compared with the first quarter (0.5%), but leading indicators suggest that activity has remained steady since then. They believe the European Central Bank will extend its QE program beyond September 2016, most likely until mid-2018, and that it could reach EUR2.4 trillion - more than twice the original EUR1.1 trillion commitment,&rdquo; said S&amp;P Capital IQ.

	The research firm has an overweight rating on DBEF.

Analyst Color

Analyst Ratings

A King Among Currency-Hedged ETFs

Despite all the consternation and controversy over the terminology, smart or strategic-beta exchange traded funds are one of the fastest-growing segments of the ETF industry.

	Strategic-beta ETFs, which funds employing various weighting methodologies from dividends to equal-weighting to factor-based funds, continue outpacing the ETF industry&#39;s already impressive growth. At the end of the second quarter, there were 844 strategic-beta ETFs, with collective assets under management of approximately $497 billion worldwide, according to <a href="http://www.morningstar.com/">Morningstar</a>.

	There is reason to believe the growth of strategic beta ETFs is still in the early innings because advisors and institutional are continuing to boost usage of such funds. According to FTSE Russell&rsquo;s first U.S. retail financial advisor market survey (<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">Smart Beta:</a> 2015 survey findings from U.S. financial advisors), 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using&nbsp;<a href="http:// http://www.benzinga.com/trading-ideas/long-ideas/15/09/5871033/the-survey-says-advisors-love-smart-beta-etfs">multiple strategic-beta approaches</a>.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5879073/slicing-and-dicing-the-s-p-500-with-etfs">Slicing And Dicing The S&amp;P 500 With ETFs</a>

	Year-to-date, three of the top 10 asset-gathering ETFs are<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5867634/the-currency-hedged-etf-love-affair-continues"> currency-hedged funds</a>, a group that can be classified in the strategic-beta realm. Those ETFs are the WisdomTree Europe Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>), Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>) and the WisdomTree Japan Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/dxj#NYSE">DXJ</a>).

	&quot;As new products have continued to roll off asset managers&#39; assembly lines, their sales and marketing departments have been working tirelessly to position these new models within an increasingly competitive field. The result has been a ratcheting up of the level of complexity of the indexes that form the raw stuff of these benchmark-based investment products and, in some cases, a growing disparity between how they are pitched by their sponsors and the actual investment results they produce,&rdquo; notes <a href="http://news.morningstar.com/articlenet/article.aspx?id=716346">Morningstar</a>.

	Speaking of new, sophisticated ETFs, several of this year&#39;s most successful rookie ETFs are strategic-beta products, including the WisdomTree Europe Hedged SmallCap Equity Fund (NYSE: <a class="ticker" href="/stock/eusc#NYSE">EUSC</a>) and the PowerShares S&amp;P 500 ex-Rate Sensitive Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/xrlv#NYSE">XRLV</a>).

	A frequent criticism of strategic-beta ETFs is that these funds often sport higher fees than their traditional cap-weighted counterparts. While the average fee differential between a cap-weighted ETF and a strategic beta fund is not jaw-dropping, it adds up over time and there are plenty of examples of prosaic broad market ETFs with annual fees of 0.1 percent or less while it is not hard to find smart-beta products with annual expense ratios in the 0.7 percent (or higher) range.

	There is good news on the strategic-beta fee front. As Morningstar notes, increased competition in the space is likely to pressure fees and that is good for investors. It&#39;s already happening. On Wednesday, Goldman Sachs <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5873462/goldman-sachs-heads-to-emerging-markets-with-new-etf#/null">introduced its second ETF</a> this month, the Goldman Sachs ActiveBeta&reg; Emerging Markets Equity ETF (NYSE: <a class="ticker" href="/stock/gem#NYSE">GEM</a>). That ETF is priced &ldquo;34 percent lower than the most liquid Emerging Market Equity ETF by volume, and more than 22 percent lower than the Morningstar Diversified Emerging Markets category Strategic Beta average,&rdquo; according to Goldman.

	Goldman&#39;s first ETF, also a strategic-beta offering, the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSE: <a class="ticker" href="/stock/gslc#NYSE">GSLC</a>), costs just 0.09 percent per year, putting it in direct fee competition with popular cap-weighted funds issued by Vanguard.

	&quot;An increasingly crowded and competitive landscape will also put pressure on fees. We have already seen instances of aggressive fee reductions for strategic-beta ETPs. We anticipate that cost-competition in this space will become more prominent in the years to come,&rdquo; said Morningstar.

	Home to a combined $51.1 billion in assets under management, the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="/stock/iwf#NYSE">IWF</a>) and the iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="/stock/iwd#NYSE">IWD</a>) are the two largest (and oldest) strategic beta ETFs trading in the US.

Emerging Market ETFs

EUSC

GSLC

XRLV

Delving Deeper Into Strategic-Beta ETFs

The Federal Reserve did not do U.S. dollar bulls any favors earlier this month when the central bank passed on raising interest rates, but investors should not be hasty in writing obituaries for currency-hedged funds.

	Led by the WisdomTree Europe Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>), currency-hedged ETFs have been gathering assets at breakneck speed this year. Year-to-date, HEDJ and DBEF have added $15.5 billion and nearly $13.1 billion, respectively, <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5819082/buying-currency-hedged-europe-etfs-on-the-dip">in new assets</a>.

	Predictably, the asset-gathering proficiency of those ETFs and others has been a magnet for critics and scare tactics. Intrepid investors and money managers are ignoring those clarion calls as highlighted by the more than $2 billion in assets added by DBEF in the current quarter. That makes DBEF, the currency-hedged answer to the widely followed MSCI EAFE Index, this quarter&#39;s top asset-gathering ETF. Only three ETFs have added more new assets since the start of July than DBEF.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5867635/etf-bears-growl-south-of-the-border">ETF Bears Growl South Of The Border</a>

	&ldquo;When volatility spikes in global markets, the performance of an unhedged international-equity fund can be negatively affected by falling international-equity markets as well as a rising U.S. dollar/falling foreign currency. During the 2008 global financial crisis, the unhedged MSCI EAFE Index had a maximum drawdown of 54.2%, whereas the hedged version declined 47.7%. During the past 25 years, the hedged MSCI EAFE Index also exhibited slightly less volatility than the unhedged index. This makes sense, as currency fluctuations are a source of return volatility in an unhedged portfolio,&rdquo; according to a&nbsp;<a href="http://news.morningstar.com/articlenet/article.aspx?id=715822">recent Morningstar</a> research piece.

	While the recent bout of dollar weakness has weighed on DBEF, the fund is down just 0.6 percent this year compared to a 4 percent loss for the MSCI EAFE Index.

	Recently slowing momentum for currency-hedged ETFs does not mean investors should abandon the asset class altogether. In fact, some market observers see opportunity with some of these funds, even as some professional investors get <a href="http:// http://www.benzinga.com/trading-ideas/long-ideas/15/08/5790177/returning-to-some-popular-etf-trades">skittish about the dollar rally</a>.&nbsp;

	&ldquo;However, the eurozone and Japan are expected to maintain aggressive monetary easing as the region continues to face recessionary and deflationary pressures. This divergence in central bank policies between the U.S. and the other major developed markets has supported the recent appreciation of the U.S. dollar against major currencies,&rdquo; according to Morningstar.

	Japanese stocks are DBEF&#39;s largest geographic weight at 21.8 percent while Eurozone nations combine for about a quarter of the ETF&#39;s weight. That is to say those long DBEF should be rooting for the Federal Reserve to raise rates while cheering for the Bank of Japan and the European Central Bank to continue to be aggressive in their easing efforts.

	A potential wild card for DBEF is the Bank of England, which could raise interest rates sometime in the next year. British stocks are DBEF&#39;s second-largest weight at almost 20.6 percent.

The Currency-Hedged ETF Love Affair Continues

One thing issuers of exchange traded funds are particularly adept at is milking a hot a theme. That is certainly true of currency hedged funds, which are among this year&#39;s top asset-gathering ETFs.

	Consider this: In a single day earlier this year, BlackRock Inc.&nbsp;(NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>)&#39;s iShares unit, the world&#39;s largest issuer of ETFs, launched 11 currency hedged products. On August &nbsp;12 and August 19, Deutsche Asset &amp; Wealth Management (Deutsche AWM) launched a <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5778012/deutsche-awm-continues-currency-hedged-drive-with-six-new-etf">combined 10 currency hedged ETFs</a>.

	Deutsche AWM&#39;s August 12 launches were comprised of a quartet of dividend ETFs&nbsp;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5760173/deutsche-awm-launches-four-currency-hedged-dividend-etfs">with currency hedged kickers</a>. Those new funds are the Deutsche X-trackers ACWI ex-U.S. High Dividend Yield Hedged Equity ETF (NYSE: HDAW), Deutsche X-trackers Emerging Markets High Dividend Yield Hedged Equity ETF (NYSE: HDEE), Deutsche X-trackers EAFE High Dividend Yield Hedged Equity ETF (NYSE: HDEF) and the Deutsche X-trackers Eurozone High Dividend Yield Hedged Equity ETF (NYSE: HDEZ).

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5847256/another-opec-etf-debuts">Another OPEC ETF Debuts</a>

	The marriage of dividends and currency hedging via ETFs, particularly developed market funds, makes sense. Especially at a time when equity markets in several major developed markets, including Australia, Germany and Japan, sport higher dividend yields than the yields on those countries&#39; benchmark government bonds.

	&quot;Given the importance these products attach to dividends, it&rsquo;s worth quickly recapping two related theories from corporate finance: Dividend Irrelevance and Dividend Signaling. The theory of Dividend Irrelevance would level two charges at a highdividend strategy; that investors can simply recreate their own dividends by selling stock and that dividend policy cannot impact a firm&rsquo;s value,&rdquo; said Deutsche AWM in a&nbsp;<a href="https://etfus.deutscheawm.com/US/EN/Homepage">research piece out Thursday</a>. &ldquo;We believe these concerns are not valid here for two reasons. First, because the theory assumes zero transaction costs, which is unrealistic; it is unlikely that investors would want to go to the trouble and expense of selling down their holdings on a quarterly basis to recreate dividend yields. Second, the assertion that dividend policy doesn&rsquo;t affect a firm&rsquo;s valuation has been challenged by more recent evidence that higher-yielding stocks might actually outperform the market over the long run.&rdquo;

	The Deutsche X-trackers ACWI ex-U.S. High Dividend Yield Hedged Equity ETF tracks the MSCI ACWI ex USA High Dividend Yield US Dollar Hedged Index, the currency hedged equivalent of the widely followed MSCI ACWI ex USA Index.

	The new ETF holds nearly 230 stocks, a third of which are financial services names, according to issuer data. Over a third of HDAW&#39;s geographic weight is allocated to the UK, an important trait because after the US, the UK is the second-largest developed markets dividend market and one of a small number of markets that has, <a href="http://etfus.deutscheawm.com/US/EN/Product-Detail-Page/HDAW">in recent years</a>, offered dividend growth on par with the US.

	As Deutsche AWM notes, it is important for U.S. investors to remember that ex-U.S. developed market indexes often sport higher dividend yields than U.S. equivalents.

	&ldquo;The dividend yields of the S&amp;P 500 Index (U.S.), FTSE 100 Index (United Kingdom) and DAX (Germany) over the last fifteen years or so, averaging 1.9%, 3.6% and 2.9%, respectively. Not only are dividend yields currently higher abroad, but this trend has also been very consistent over time. For an investor motivated by an absolute level of income, accessing these higher levels via an international perspective could be attractive,&rdquo; said Deutsche AWM.

	The Deutsche X-trackers EAFE High Dividend Yield Hedged Equity ETF is the currency hedged dividend answer to the MSCI EAFE Index, perhaps the most widely followed developed markets benchmark. The Deutsche X-trackers EAFE High Dividend Yield Hedged Equity ETF is truly dominated by British stocks with an over 40 percent to the UK, France and Australia, another potent developed market dividend grower, are the other countries with double-digit allocations in the new ETF.

	Deutsche AWM knows what it is doing when it comes to alternatives to the standard MSCI EAFE Index. After all, the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>) is now a $13.5 billion ETF, making it one of the <a href="http://www.benzinga.com/news/15/08/5752088/u-s-etfs-are-adding-assets-at-breakneck-speed">largest EAFE ETFs in the world</a>.

	&ldquo;Currency hedging has the possibility to reduce volatility&mdash;a potentially attractive prospect for income-oriented investors who rely on investments to meet present liabilities. Over the long run, hedging currency exposure or leaving investments unhedged does not typically have a significant impact on returns, though currency fluctuations can significantly reduce or add to returns over short periods of time,&rdquo; adds Deutsche AWM.

Have Your Cake And Eat It, Too, With Currency Hedged Dividend ETFs

Last week was a wild one on Wall Street as stocks experienced one of the worst two-day declines in several years only to give way to a two-day rally, the likes of which had not been seen in four years.

	When the closing bell sounded Friday, the exchange traded funds tracking major U.S. equity benchmarks, such as the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>), finished the week higher, led by a 3.1 percent gain for the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>). QQQ is the Nasdaq-100 tracking ETF.

	However, last week will not be remembered as a good one for ETFs at large due to an array of pricing issues during Monday&#39;s meltdown that left some ETF investors seething because they had taken unexpected (and large) losses.

	Headlines on the matter include verbiage such as &ldquo;ETF minefield,&rdquo; &ldquo;harsh lessons for ETF investors&rdquo; and &ldquo;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5787147/a-wild-day-for-a-beloved-momentum-etf">ETF flash crash</a>.&rdquo;&nbsp;

	This week brings a deluge of important economic data points, which should put the spotlight on plenty of well-known ETFs. From <a href="http://finance.yahoo.com/news/focus-turns-u-data-china-002834174.html">Reuters</a>: &ldquo;The economic figures will culminate in Friday&rsquo;s jobs report that should reveal more about the strength of the U.S. economy.

	Car sales, construction spending, the Federal Reserve&#39;s &#39;beige book&#39; and jobs growth may show the economy is strong enough to withstand the first rate hike in nearly a decade from the Federal Reserve, despite worries about a hard landing for China&rsquo;s economy.&nbsp;

	With so much U.S. economic data due out in the week ahead and speculation swirling that the Federal Reserve will not raise interest rates at its September meeting, the PowerShares DB US Dollar Index Bullish Fund (NYSE: <a class="ticker" href="/stock/uup#NYSE">UUP</a>) should be getting plenty of attention.

	UUP, the U.S. Dollar Index tracking ETF, has traded lower over the past month due in large part to markets readjusting the view that the Fed is not as close to boosting borrowing costs as previously expected.

	The fallout from the dollar&#39;s retreat has been predictable: Currency hedged ETFs, such as the WisdomTree Europe Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>), have been met with naysayers claiming the veracity of this year&#39;s hottest ETF trade is waning.

	Put simply, UUP, DBEF, HEDJ and related ETFs would love to see a surprisingly strong August jobs number that puts a September rate hike back in play. That would also be a <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5793768/an-etf-with-currency-hedged-compensation">crushing blow to dollar bears</a>.

	With construction spending data due out, obvious plays include the SPDR S&amp;P Homebuilders ETF (NYSE: <a class="ticker" href="/stock/xhb#NYSE">XHB</a>) and the PowerShares Dynamic Building &amp; Construction Portfolio (NYSE: <a class="ticker" href="/stock/pkb#NYSE">PKB</a>), which <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5794003/building-something-with-this-construction-etf">we recently highlighted</a>.

	These ETFs were not immune to the broader market declines seen early last week, but they are in the midst of a substantial run of out-performance over broader equity benchmarks.

	All these data points we have been mentioning here should have some impact on oil prices, which closed last week in style. The downtrodden&nbsp;

	United States Oil Fund (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>) surged 12.5 percent last week, but reminding investors just how bad things have been for that ETF, USO is still almost 23 percent below its 200-day moving average.

	Some traders are saying last week&#39;s oil rally was no more than short-covering. If that theory proves accurate, risk-tolerant traders might want to cozy up to the ProShares UltraShort Bloomberg Crude Oil (NYSE: <a class="ticker" href="/stock/sco#NYSE">SCO</a>) in the days ahead.

Commodities

Previews

Events

PowerShares ETF Trust Dynamic Building &nstruction Portfolio

ETFs For The Week Ahead: Hoping For Some Calm

The WisdomTree Inter Hedged Eq Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF, DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>), are still the top two asset-gathering exchange traded funds on a year-to-date basis, having hauled in more than $28.6 billion combined.
Additionally, the WisdomTree Japan Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/dxj#NYSE">DXJ</a>) is still among the top 10 asset gatherers as well.
However, with the dollar recently faltering as traders pare back expectations that the Federal Reserve will raise interest rates next month and with the euro and yen seeing safe-haven buying in the midst of turmoil across global financial markets, it might be easy to assume some of this year&#39;s <a href="http://www.benzinga.com/news/15/08/5752088/u-s-etfs-are-adding-assets-at-breakneck-speed">most popular ETF trades</a> among professional investors are losing momentum.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5788164/how-to-access-black-mondays-best-performing-market-if-you-dar">How To Access Black Monday's Best Performing Market (If You Dare)</a></bzrelatedlink>
<h3>'Just' $5.9 Billion</h3>
&ldquo;ETFs that hedge against currency risk have attracted just $5.9 billion since the end of June as a rally in the greenback slowed. That compares with the $41 billion they lured in the first six months of the year, when a surging dollar imperiled international returns for U.S. investors,&rdquo; according to <a href="http://www.bloomberg.com/news/articles/2015-08-19/etfs-forced-to-get-smart-hedging-dollar-with-easy-money-gone">Bloomberg</a> as of August 19.
&ldquo;Just&rdquo; $5.9 billion is no small sum and it bears noting that DBEF, a currency hedged play on the widely followed MSCI EAFE Index, and HEDJ have added over $3.8 billion combined in the current quarter. Only the Vanguard 500 Index Fund (NYSE: <a class="ticker" href="/stock/voo#NYSE">VOO</a>) has added more new money this quarter than DBEF.
<h3>The Currency-Hedged Asset Class</h3>
Recently slowing momentum for currency hedged ETFs does not mean investors should abandon the asset class altogether. In fact, some market observers see opportunity with some of these funds, even as some professional investors get skittish about the dollar rally.
&ldquo;The trades everyone had on at the beginning of the year, and have either since abandoned or plan to this week, are likely the trades that work into year-end&ndash;that is, a steeper curve in fixed income, strong U.S. dollar, long Japanese and European equities currency hedged, etc.,&rdquo; said <a href="https://rareviewmacro.com/">Rareview Macro</a> founder Neil Azous in a recent note.
<h3>A German Example</h3>
Azous highlighted the iShares Currency Hedged MSCI Germany ETF, iShares Trust (NYSE: <a class="ticker" href="/stock/hewg#NYSE">HEWG</a>), as a potential area of opportunity following the savage correction endured by Germany&#39;s benchmark DAX. There is a DAX-tracking ETF here in the U.S., the Recon Capital DAX Germany ETF (NYSE: <a class="ticker" href="/stock/dax#NYSE">DAX</a>). Even with Tuesday&#39;s 3.1 percent gain, DAX is still down more than 5 percent over the past month.
Azous noted that German stocks are further along in their correction phase than their broader European and U.S. counterparts. Perhaps the green light on the hedged Germany trade, at least for contrarians, is this anecdote: Investors are abandoning the trade.
 Including HEWG, there are three euro-hedged Germany ETFs trading in New York and all three have lost assets this quarter to the tune of over $55 million.

HEWG

Returning To Some Popular ETF Trades

Currency-hedged exchange traded funds have been among this year&#39;s most prolific asset gatherers. Three such funds are among the top 10 asset-gathering ETFs this year. The Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>) is one of those funds.

	In fact, only one ETF has added more new assets this year than the nearly $12.9 billion added by DBEF. Among other offerings, this ETF has helped cement Deutsche Asset &amp; Wealth Management&#39;s (Deutsche AWM) status as a leading issuer of currency hedged ETFs and the firm is bolstering that status with the debut of six new currency hedged funds.

	Deutsche AWM adds its second yen hedged ETF with the debut of the Deutsche X-trackers Japan JPX-Nikkei 400 Hedged Equity ETF (NYSE: JPNH). JPNH is the currency hedged answer to the Deutsche X-trackers Japan JPX-Nikkei 400 Equity ETF (NYSE: JPN), which debuted in late June.

	JPN and JPNH track the JPX-Nikkei 400 Index, a benchmark that gives investors a fundamental approach to stocks in Asia&#39;s second-largest economy.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5777854/4-new-leveraged-etfs-right-for-the-times">4 New Leveraged ETFs Right For The Times</a>

	That index was launched in January 2014 as means of revitalizing the Japanese equity market.

	&quot;The JPX-Nikkei 400 Index employs a rigorous screening process based on return on equity, cumulative operating profit and market capitalization to select high-quality, capital-efficient Japanese companies,&rdquo; according to a statement issued by Deutsche AWM.

	The $1.39 billion Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbjp#NYSE">DBJP</a>) is Deutsche AWM&#39;s other Japan offering. That fund is one of the largest U.S.-listed Japan ETFs.

	One of the more intriguing new offerings from Deutsche AWM is the Deutsche X-trackers MSCI Southern Europe Hedged Equity ETF (NYSE: DBSE). While ETFs tracking the so-called PIIGS nations have received ample attention in recent years, there is not a dedicated multi-country ETF for this motley crew.

	The Deutsche X-trackers MSCI Southern Europe Hedged Equity ETF comes close as that new fund is a dedicated Italy/Portugal/Spain play. In reality, the new ETF is mostly Spain and Italy as those two countries, which are the largest Eurozone economies after Germany and France, combine for over 95 percent of the <a href="https://etfus.deutscheawm.com/US/EN/Product-Detail-Page/DBSE">new ETF&#39;s weight</a>.&nbsp;

	Speaking of Italy and Spain, Deutsche AWM introduced the Deutsche X-trackers MSCI Italy Hedged Equity ETF (NYSE: DBIT) and the Deutsche X-trackers MSCI Spain Hedged Equity ETF (NYSE: DBSP). Those funds add to Deutsche AWM&#39;s lineup of Europe currency hedged single-country ETFs, which includes the increasingly popular Deutsche X-trackers MSCI Germany Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbgr#NYSE">DBGR</a>).

	Due to the divergent monetary policies throughout the developed world, which have been prompted by the Bank of Japan and the European Central Bank easing at a time when many expect the Federal Reserve to tighten, it can be said that all of Deutsche AWM&#39;s new launches are well-timed.

	However, the Deutsche X-trackers MSCI Australia Hedged Equity ETF (NYSE: DBAU) is extremely well-timed as the Reserve Bank of Australia has been on a scorched earth campaign to weaken the Aussie in a bid to bolster non-mining sectors of the world&#39;s 12th-largest economy. Why could DBAU be a star? The CurrencyShares Australian Dollar ETF (NYSE: <a class="ticker" href="/stock/fxa#NYSE">FXA</a>) has plunged 10 percent this year.

	The Deutsche X-trackers MSCI EAFE Small Cap Hedged Equity ETF (NYSE: DBES) is Deutsche&#39;s other new offering. That new ETF tracks the MSCI EAFE Small Cap U.S. Dollar Hedged Index, making it the small-cap complement to the aforementioned DBEF.

	With Wednesday&#39;s launches, Deutsche AWM now offers 17 currency hedged ETFs, the largest such lineup among ETF sponsors in the U.S., according to a statement.

DBGR

DBJP

Deutsche AWM Continues Currency-Hedged Drive With Six New ETFs

It may not be the earth-shattering combination that chocolate and peanut butter is, but exchange traded funds issuers are marrying the prominent themes of currency hedging and dividends.

	Deutsche Bank&#39;s ETF unit, Deutsche Asset &amp; Wealth Management (DAWM), did just that on Wednesday with introduction of four new currency hedged dividend ETFs. Those new funds are the Deutsche X-trackers ACWI ex-U.S. High Dividend Yield Hedged Equity ETF (NYSE: HDAW), Deutsche X-trackers Emerging Markets High Dividend Yield Hedged Equity ETF (NYSE: HDEE), Deutsche X-trackers EAFE High Dividend Yield Hedged Equity ETF (NYSE: HDEF) and the Deutsche X-trackers Eurozone High Dividend Yield Hedged Equity ETF (NYSE: HDEZ).

	Thanks to ETFs such as the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>), the Deutsche X-Trackers MSCI Europe Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbeu#NYSE">DBEU</a>) and the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbjp#NYSE">DBJP</a>), Deutsche AWM is one of the largest issuers of <a href="http://www.benzinga.com/news/15/08/5752088/u-s-etfs-are-adding-assets-at-breakneck-speed">currency hedged ETFs</a>.
<h3>
	A Closer Look</h3>

	Earlier this week, Deutsche AWM said it has over <a href="http://www.businesswire.com/news/home/20150810005157/en/Deutsche-Asset-Wealth-Management%E2%80%99s-X-trackers-Platform-Surpasses#.VcjXl53D-1Z">$20 billion </a>in U.S. ETF assets and is now one of the top 10 issuers in the world&#39;s largest ETF market. Deutsche AWN is the world&#39;s fifth-largest ETF sponsor.&nbsp;

	The Deutsche X-trackers ACWI ex-U.S. High Dividend Yield Hedged Equity ETF tracks the MSCI ACWI ex USA High Dividend Yield US Dollar Hedged Index, the currency hedged equivalent of the widely followed MSCI ACWI ex USA Index.

	The new ETF holds nearly 230 stocks, a third of which are financial services names, according to issuer data. Over a third of HDAW&#39;s geographic weight is allocated to the UK, an important trait because after the US, the UK is the second-largest developed markets dividend market and one of a small number of markets that has, <a href="http://etfus.deutscheawm.com/US/EN/Product-Detail-Page/HDAW">in recent years</a>, offered dividend growth on par with the US.

	The Deutsche X-trackers Emerging Markets High Dividend Yield Hedged Equity ETF follows the MSCI EM (Emerging Markets) High Dividend Yield US Dollar Hedged Index. That new ETF features an even heavier financial services weight of almost 39 percent, but two other sectors &ndash; energy and telecom &ndash; also command double-digit weights.

	HDEE&#39;s country weights are reflective of where reliable dividend growth has come from in the developing world in recent years. Combined, China, South Africa and Taiwan are 62.5 percent of the new ETF&#39;s geographic weight.

	The Deutsche X-trackers EAFE High Dividend Yield Hedged Equity ETF is the currency hedged dividend answer to the MSCI EAFE Index, perhaps the most widely followed developed markets benchmark. Deutsche AWM is already the dominant issuer of MSCI EAFE currency hedged alternatives by way of the aforementioned DBEF. Only one ETF has added more new assets this year than DBEF.

	The Deutsche X-trackers EAFE High Dividend Yield Hedged Equity ETF is truly dominated by British stocks with an over 40 percent to the UK, France and Australia, another potent developed market dividend grower, are the other countries with double-digit allocations in the new ETF.

	Deutsche AWM also expands its lineup of dedicated Eurozone ETFs with the Deutsche X-trackers Eurozone High Dividend Yield Hedged Equity ETF, which joins the Deutsche X-trackers MSCI Eurozone Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbez#NYSE">DBEZ</a>) and the Deutsche X-trackers MSCI Germany Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbgr#NYSE">DBGR</a>) as the firm&#39;s Eurozone ETFs.

	HDEZ allocates over a third of its weight to financial services names and it would not be surprising to see the new ETF sport a solid yield thanks to an almost 20 percent utilities weight. Germany and France, the Eurozone&#39;s two largest economies, combine for 42.5 percent of HDEZ&#39;s geographic weight. Finland, the only Nordic nation that is a Eurozone member, is 18.3 percent of the&nbsp;<a href="https://etfus.deutscheawm.com/US/EN/Product-Detail-Page/HDEZ">new ETF&#39;s weight</a>.&nbsp;

	HDEZ, HDEF and HDAW each charge 0.45 percent per year while HDEE charges 0.65 percent.

DBEU

Deutsche AWM Launches Four Currency Hedged Dividend ETFs

China and Greece, among other factors, challenged investors desire to be long equities in July, but problems in international markets and lingering fears that U.S. interest rates are set to rise did not keep cash from piling into exchange traded funds.

	In fact, the asset-gathering pace being set by U.S.-listed ETFs through the first seven months of 2015 is well ahead of prior years. U.S.-listed exchange traded products (ETPs), including ETFs and exchange traded notes (ETNs), are adding net new assets (NNA) at clip that is 8 percent ahead of previous years, <a href="http://etfgi.com/news/detail/newsid/524">according to ETFGI</a>, a London-based ETF research firm.&nbsp;

	Through the first seven months of 2015, ETPs trading in the U.S. have added $125.1 billion in new assets, topping the seven-month record of $115.9 billion set in 2013, notes ETFGI.

	With the U.S. dollar soaring, investors have strongly favored international ETFs over domestic equity funds this year. Year-to-date, eight of the top 10 asset-gathering ETFs are international funds, including three currency hedged ETFs &ndash; the WisdomTree Europe Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>), the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>) and the WisdomTree Japan Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/dxj#NYSE">DXJ</a>).

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5749867/leveraged-gold-miners-etfs-to-host-reverse-split-party">Leveraged Gold Miners ETFs To Host Reverse Split Party</a>

	HEDJ and DBEF have added nearly $28 billion in new assets on a combined basis this year. Underscoring investors&#39; affinity for HEDJ and DBEF is this anecdote: The next five ETFs among the top 10 asset gatherers would need to be combined to arrive at an inflows total that comes close to the new assets added by HEDJ and DBEF.

	&ldquo;The S&amp;P 500 index ended up 2% for the month of July and finished the first seven months of 2015 up 3%. Although investors faced uncertainty in China and Greece during July they continued to invest significant net new assets in equity ETFs&rdquo;, said Deborah Fuhr, managing partner of ETFGI.

	Last month, combined assets under management for the world&#39;s ETPs eclipsed the assets held by hedge funds. The more than 5,800 exchange traded products listed around the world have a combined $2.971 trillion in assets under management, just ahead of combine AUM of $2.969 trillion for hedge funds, according to <a href="http://www.etftrends.com/2015/07/in-asset-race-etfs-eclipse-hedge-funds/">ETF Trends</a>.

	In July, BlackRock&nbsp;(NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>)&#39;s iShares, the world&#39;s largest ETF issuer, added $7.5 billion in new ETF assets followed by State Street Corp&nbsp;(NYSE: <a class="ticker" href="/stock/stt#NYSE">STT</a>)&#39;s State Street Global Advisors at $5.3 billion, according to ETFGI. Vanguard, the second-largest U.S. ETF sponsor, added $4.5 billion. WisdomTree (NASDAQ: <a class="ticker" href="/stock/wetf#NASDAQ">WETF</a>) the fifth-largest U.S. ETF issuer, and Deutsche Bank&nbsp;(NYSE: <a class="ticker" href="/stock/db#NYSE">DB</a>)&#39;s Deutsche Asset &amp; Wealth Management rounded out last month&#39;s top five asset gatherers with inflows of $1.2 billion and $997 million, respectively.

	Year-to-date, the top five asset-gathering ETF issuers are, in order, iShares, Vanguard, WisdomTree, Deutsche Asset &amp; Wealth Management and First Trust, according to ETFGI.

	Among the top 10 asset-gathering ETFs as of August 6, Vanguard has four, more than any other issuer, followed by three for iShares. WisdomTree has two, HEDJ and DXJ; while Deutsche Asset &amp; Wealth Management has one, DBEF.

U.S. ETFs Are Adding Assets At Breakneck Speed

Stoked by Greece&#39;s flirtation with Eurozone departure, which prompted a five-week closure of equity markets there, and plummeting Chinese stocks, July was a turbulent month for global stocks but that did not stem the tide of inflows to exchange traded funds.

	&ldquo;July global ETP flows of $36.3 billion were the best in five months, and the second best month of the year, with investors initially favoring safer fund categories before shifting attention to non-U.S. developed markets equity later in the month,&rdquo; according to <a href="http://www.blackrock.com/">BlackRock</a>, the world&#39;s largest asset manager and parent company of iShares, the world&#39;s largest ETF sponsor.
<h3>
	U.S. Equity</h3>

	As China and Greece rattled some investors last month, U.S. equity and fixed income ETFs benefited. For example, the SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/ivv#NYSE">IVV</a>), Vanguard S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/voo#NYSE">VOO</a>) and the iShares Core S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/ivv#NYSE">IVV</a>) were each among the month&#39;s top 10 asset-gathering ETFs. Only SPY added more than the $1.96 billion hauled in by the iShares 1-3 Year Treasury Bond ETF (NYSE: <a class="ticker" href="/stock/shy#NYSE">SHY</a>), a sign that investors were comfortable turning to shorter duration Treasurys as a means of coping with turbulent international markets.

	&ldquo;Fixed income flows rebounded to $9.6 billion following the first outflows of the year in June. As asset gathering for U.S. Treasuries subsided mid-month, corporate bond flows began to accelerate again. Investment grade corporate bond funds brought in $1.6bn and high yield corporate bonds added $1 billion,&rdquo; according to BlackRock.

	Related Link: <a href="http://Cashing In The Pot On Chip ETFs">Cashing In The Pot On Chip ETFs</a>
<h3>
	Currency Hedged</h3>

	Currency hedged ETFs, already among this year&#39;s most popular ETFs in terms of new assets added, kept that trend going last month with the addition of another $3.5 billion of assets. The WisdomTree Europe Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>), this year&#39;s top two asset-gathering ETFs, added about $2.2 billion in new assets combined last month.

	BlackRock notes that inflows to international ETFs picked in the latter half of July as tensions surrounding China and Greece ebbed a bit. July marked the third consecutive month ETF inflows topped $30 billion. However, emerging markets ETFs are standing out due asset departures. Broad emerging markets ETFs lost $2.7 billion last month with the bulk of that total coming from the iShares MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), while U.S.-listed China ETFs shed $700 million, according to BlackRock data.

	&ldquo;However, there has not been a catalyst behind the selling and year-to-date flows are unchanged from March levels. The category has stayed in a tight range all year with the recent outflows offsetting asset gathering in the second quarter,&rdquo; said the asset manager.
<h3>
	The Fed</h3>

	Although the Federal Reserve&#39;s interest rate policy remains one of the hottest topics in the investment community, investors returned to bond funds last month after pulling cash from fixed income ETFs in June. BlackRock says fixed income ETFs were on the receiving end of $9.6 billion in new assets last month. July&#39;s bond ETF inflows represented a five-month high.

	Sticking with the rising rates theme, the most popular sector fund last month was the Financial Services Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>), which hauled in $915 million in new assets, topping the $826.1 million added by the iShares Nasdaq Biotechnology ETF (NASDAQ: <a class="ticker" href="/stock/ibb#NASDAQ">IBB</a>) for top honors among sector funds.

	IBB and other biotech ETFs slid during the last two weeks of July, but the ETF is up 3.3 percent over the past week. IBB, the largest biotech ETF, is one of seven biotech funds found among the 10 best sector ETFs this year.

iShares Trust Barclays 1-3 Year Treasury Bond Fund

China, Greece Don't Derail ETF Inflows In July

BlackRock, Inc.&nbsp;(NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>), the parent company of iShares, the world&#39;s largest issuer of exchange traded funds, on Thursday expanded its lineup of currency hedged and fixed income exchange traded funds with the introduction of one new ETF: The iShares Currency Hedged Global ex USD High Yield Bond ETF (NYSE: HHYX).

	For the year ended June 2015, <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/07/5710788/yen-hedged-etfs-remain-a-preferred-avenue-to-japan#ixzz3hO1rvKwk">investors allocated $48 billion</a> to various currency hedged funds, but those inflows have accelerated in significant fashion this year with the WisdomTree Japan Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dxj#NYSE">DXJ</a>) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>) combining for year-to-date inflows of more than $25 billion.

	The iShares Currency Hedged Global ex USD High Yield Bond ETF is the first currency hedged bond ETF from iShares. The new ETF &ldquo;seeks to track the investment results of an index composed of euro, British pound sterling and Canadian dollar denominated, high yield corporate bonds while mitigating exposure to fluctuations between the value of the component currencies and the U.S. Dollar,&rdquo; <a href="https://www.ishares.com/us/products/275389/HHYX?referrer=tickerSearch">according to iShares</a>.&nbsp;

	Like many of the iShares fixed income ETFs that employ hedging mechanisms, the iShares Currency Hedged Global ex USD High Yield Bond ETF uses another iShares ETF as its primary holding, in this case it is the iShares Global ex USD High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/hyxu#NYSE">HYXU</a>), along with hedging tools, including currency forwards.

	&ldquo;We have seen significant U.S. dollar strength driven by global central bank policy divergence, and this could continue to impact U.S. dollar returns on international investments. Given this backdrop, we are pleased to now be able to provide U.S. investors with the flexibility to hedge some or all of the currency exposure of an international high yield bond investment with our iShares fixed income ETF suite,&rdquo; said iShares Head of Fixed Income Investment Strategy Matt Tucker in a statement.

	Italian bonds account for 22.2 percent of HHYX&#39;s weight while U.K. issues place second on the new ETF&#39;s roster with a weight of 15.1 percent. Germany at 14.7 percent and France at 12.6 percent are the other countries commanding double-digit allocations in the new ETF.

	HHYX, which carries an annual expense ratio of 0.43 percent, has an effective duration of almost 3.7 years, according to issuer data.

	While HHYX is a high-yield bond fund, the ETF eschews the riskiest junk-rated debt with bonds rated BB or B combining for almost 94 percent of the fund&#39;s weight.