BETHESDA, Md.–(BUSINESS WIRE)–ProShares, a premier provider of alternative ETFs, today announced the launch of two currency hedged equity ETFs: ProShares Hedged FTSE Europe ETF (HGEU) and ProShares Hedged FTSE Japan ETF (HGJP). Both are listed on NYSE Arca.
“With the strong demand for products that include built-in hedges, we are pleased to work with ProShares to offer the first currency hedged versions of our popular Europe and Japan equity indexes for U.S.-listed ETFs”
“Investors have poured billions of dollars into currency hedged ETFs to gain exposure to foreign equities while being hedged against local currency risk,” said Michael L. Sapir, cofounder and CEO of ProShare Advisors LLC, the advisor to ProShares. “With this launch today, investors who desire the benefits of currency hedged ETFs now have the option of obtaining them at a substantially lower cost than similar ETFs in the market.”
Investors had more than $47 billion in assets invested in currency hedged ETFs as of March 31, 2015. The asset-weighted average expense ratio for currency hedged European equity ETFs was 0.56% and for currency hedged Japanese ETFs was 0.47%. Expense ratios for HGEU and HGJP are 0.27% and 0.23%, respectively.1
“With the strong demand for products that include built-in hedges, we are pleased to work with ProShares to offer the first currency hedged versions of our popular Europe and Japan equity indexes for U.S.-listed ETFs,” said Ron Bundy, CEO North America benchmarks for FTSE Russell.
About the Indexes
HGEU is designed to match the performance of the FTSE Developed Europe 100% Hedged to USD Index, a free-float-adjusted and market-cap-weighted index comprising large- and mid-cap European stocks. The index hedges against fluctuations between the value of the U.S. dollar and the currencies in which the stocks are denominated. Currencies represented include the euro, Swiss franc, British pound, Danish krone, Swedish krona and Norwegian krone.
HGJP is designed to match the performance of the FTSE Japan 100% Hedged to USD Index, a free-float-adjusted and market-cap-weighted index comprising Japanese large- and mid-cap stocks. The index hedges against fluctuations between the value of the U.S. dollar and the Japanese yen.
As is typical for similar ETFs, HGEU and HGJP will use currency forwards to hedge foreign currency exposure. The currency hedges will be reset on a monthly basis.
ProShares offers the nation’s largest lineup of alternative ETFs. We help investors to go beyond the limitations of conventional investing and face today’s market challenges. ProShares helps investors build better portfolios by providing access to alternative investments delivered with the liquidity, transparency and cost effectiveness of ETFs. Our wide array of alternative ETFs can help you reduce volatility, manage risk and enhance returns.
ProShares has the largest lineup of alternative ETFs in the United States, according to Strategic Insight, based on analysis of all the known alternative ETF providers (as defined by Strategic Insight) by their number of funds and assets (as of 1/31/2015).
Investing involves risk, including the possible loss of principal. These ProShares ETFs are diversified and entail certain risks, including risks associated with the use of derivatives (swap agreements, futures contracts and similar instruments), imperfect benchmark correlation, leverage and market price variance, all of which can increase volatility and decrease performance. Short positions in a security lose value as that security’s price increases. Investments in smaller companies typically exhibit higher volatility. Smaller company stocks also may trade at greater spreads or lower trading volumes, and may be less liquid than stocks of larger companies. International investments may involve risks from: geographic concentration, valuation, differences in generally accepted accounting principles, and from economic or political instability. The funds may be adversely affected by economic uncertainty experienced in Japan or by various members of the European Union. Please see summary and full prospectuses for a more complete description of risks. Obtain them from your financial advisor or broker-dealer representative or visit ProShares.com. There is no guarantee any ProShares ETF will achieve its investment objective.
These funds’ investments may be denominated in foreign currencies. The value of such investments can change significantly as currencies strengthen or weaken relative to the U.S. dollar. The funds seek to hedge against the negative impact of currency risk by taking short positions in currency forward contracts. These short positions should increase or decrease in value as currencies decrease or increase, respectively, versus the U.S. dollar. The funds do not attempt to mitigate other factors which may have a greater influence on the equity positions than currency rate risk. No hedge is perfect. Because the hedges are reset on a monthly basis, currency risk can develop intra-month, and there is no guarantee that the short positions will completely eliminate currency rate risk. Investors may be better off in unhedged investments when foreign currencies appreciate or remain unchanged, as hedging may limit potential gains or increase losses. Performance of the funds could be particularly poor if foreign currencies appreciate at the same time that the value of the equity positions fall. There is no guarantee the funds will have positive returns.
Carefully consider the investment objectives, risks, charges and expenses of ProShares before investing. This and other information can be found in their summary and full prospectuses. Read them carefully before investing.
London Stock Exchange Group companies includes FTSE International Limited (“FTSE”), Frank Russell Company (“Russell”), MTS Next Limited (“MTS”), and FTSE TMX Global Debt Capital Markets Inc. (“FTSE TMX”). All rights reserved. “FTSE®”, “Russell®”, “MTS®”, “FTSE TMX®” and “FTSE Russell” and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies (“LSEG”) and are used by FTSE, MTS, FTSE TMX and Russell under license. All rights in the FTSE Developed Europe 100% Hedged to USD Index and the FTSE Japan 100% Hedged to USD Index (the “Indexes”) vest in FTSE International Limited (“FTSE”). The ProShares Hedged FTSE Europe ETF and the ProShares Hedged FTSE Japan ETF (the “ETFs”) have been developed solely by ProShares. The Indexes are calculated by FTSE or its agent. The ETFs have not been passed on by LSEG or its affiliates as to its legality or suitability. LSEG and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the ETFs and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Indexes or (b) investment in or operation of the ETFs. LSEG makes no claim, prediction, warranty or representation either as to the results to be obtained from the ETFs or the suitability of the Indexes for the purpose to which they are being put by ProShares. LSEG neither has nor will provide any advice or recommendation in relation to the Indexes. Neither LSEG nor its affiliates guarantee that the Indexes have been accurately calculated and no party shall have any liability for any error in such calculation.
ProShares are distributed by SEI Investments Distribution Co., which is not affiliated with the funds’ advisor.
1 Source: Morningstar, as of March 31, 2015. HGEU and HGJP comparisons are to all ETFs that track European and Japanese equity indexes, respectively, and include hedges against local currency risk. The ETFs in the comparison track different indexes, have different holdings, and may perform differently. Expense ratios are subject to change. Brokerage fees, commissions and other fees may apply.
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