Deutsche Releases Trio of Nontraditional Bond ETFs

Deutsche Releases Trio of Nontraditional Bond ETFsFor investors looking to hedge against potential interest rate rises, Deutsche Asset & Wealth Management has made it easier with three recently launched nontraditional bond ETFs that track indices from its Deutsche Bank Index Quant Group (DBIQ):

  • The Deutsche X-trackers HY Corporate Bond – Interest Rate Hedge ETF (HYIH)
  • The Deutsche X-trackers Investment Grade Bond – Interest Rate Hedged ETF (IGIH)
  • The Deutsche X-trackers Emerging Markets Bond Interest Rate – Interest Rate Hedged ETF (EMIH)

All three interest rate hedged ETFs debuted last month on March 3.

High Yield Corporate Bond ETF

The Deutsche X-trackers HY Corporate Bond – Interest Rate Hedge ETF (HYIH) tracks the DBIQ High Yield Corporate Bond – Interest Rate Hedged Index, which aims to mitigate interest rate sensitivity “across the yield curve” in the event of rising interest rates. The ETF currently holds 67 issues with a yield-to-worst (YTW) of 4.9%. YTW is the lowest potential yield that can be received on a bond without the issuer actually defaulting.

According to its fact sheet, the Deutsche X-trackers HY Corporate Bond – Interest Rate Hedge ETF has major holdings from the telecommunications (12.1%), media (8.9%), and oil and gas sectors (8.8%), but the largest percentage of its holdings come from “other,” at 20.3%.

Investment Grade Bond ETF

For investors interested in less risk, the Deutsche X-trackers Investment Grade Bond – Interest Rate Hedged ETF (IGIH) tracks the DBIQ Investment Grade Corporate Bond – Interest Rate Hedged Index, which also attempts to mitigate interest rate risk in rising-rate environments, but it does so through investing in investment-grade bonds rather than high-yield issues.

The Deutsche X-trackers Investment Grade Bond – Interest Rate Hedged ETF’s holdings are more heavily concentrated in the banking sector, which accounted for 26.6% of its holdings as of January 31. The fund’s fact sheet also lists oil and gas (8.4%) and telecommunications (7.7%) as major holdings.

Emerging Markets Bond ETF

Finally, the Deutsche X-trackers Emerging Markets Bond Interest Rate – Interest Rate Hedged ETF (EMIH) provides investors with interest rate hedged exposure to emerging market bonds. The ETF tracks another DBIQ Index, this time the DBIQ Emerging Markets Bond – Interest Rate Hedged Index, which consists of U.S. dollar-denominated bonds from emerging markets issuers. Like the other ETFs, the Deutsche X-trackers Emerging Markets Bond Interest Rate – Interest Rate Hedged ETF aims to mitigate interest rate sensitivity “across the yield curve” in the event of rising interest rates.

The Deutsche X-trackers Emerging Markets Bond Interest Rate – Interest Rate Hedged ETF has diversified exposure to emerging markets from around the world. According to its fact sheet, its largest slice of holdings come from Argentina, Croatia, Hungary, Indonesia, Peru, the Phillipines, Poland Qatar, South Africa, Turkey, at 5% each; but the fund also provides exposure to debt from Brazil, Russia, China, and many other lesser-known countries, like Kazakhstan and Latvia.

For more information, visit Deutsche’s ETF website.

Add a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.