While many fixed income investors are accustomed to hedging their currency exposure, equity investors generally prefer to leave their allocation in an unhedged exposure, accepting the embedded currency risks. However, recent large-scale FX events, such as the GBP devaluation following the Brexit vote and CHF appreciation following the abandonment of a fixed exchange rate have attuned investors to some downsides of this approach.
More recently, the sharp depreciation in USD, coupled with expectations that this could be a continued trend for the currency, has caught investors’ attention, as USD exposure makes up more than 60% of most global equity exposures. Therefore, sustained USD depreciation can have a material impact for non USD-denominated investors.
Another trend that has led equity investors to begin adopting hedged allocations is a reduction in the cost of hedging. The cost to hedge is made up of the interest rate differential and ‘dollar basis’. Both have substantially reduced throughout this year as the Fed was forced to aggressively cut rates to combat the impact to economic growth of the coronavirus.
As the chart below shows, once a USD cycle reverses, it is rarely just a flash in the pan, but is generally a multi-year event with wide swings in the currency. Therefore, this currency theme is likely to play on investors’ minds for the foreseeable future, and thus currency-hedged ETFs could become more widely used among European investors.
Running a currency-hedged equity ETF presents issues not always faced by a fixed income instrument, due to recently introduced ESMA regulations that carry the following constraints for UCITS funds:
Over-hedged positions must not exceed 105% of the share class NAV, and
Under-hedged positions must not fall short of 95% of the portion of the NAV of the share class which is to be hedged
Single equity exposure ETFs (e.g. S&P 500 index) are more prone to breach these boundaries. This is because a currency-hedged fund or share class tracking a standard, monthly hedged benchmark is more prone to unexplained tracking error during periods of increased volatility. SPDR has resolved this situation by developing the first hedged benchmark that incorporates the regulatory requirements, through the S&P 500 EUR Dynamic Hedged Index.
Dynamic hedged indices rebalance on a monthly basis but include a mechanism to ensure that the index does not become over-hedged or under-hedged over a certain percentage threshold. For the S&P 500 EUR Dynamic Hedged Index, that threshold is 5% (hedge ratio between 95% and 105%) and the index will be adjusted at the close of the following business day to reset the hedge ratio back to 100%.
The SPDR S&P 500 EUR Hedged UCITS ETF (Acc) (Ticker: SPPE GY) allows managers the flexibility to switch hedging preference within the vehicle in a cost and operationally efficient manner. At a TER of 12bps, the SPDR ETF is the least expensive among the physically replicated exposures.
SPDR also offers the SPDR MSCI ACWI EUR Hdg UCITS ETF, which provides investors with exposure to global equities but with an index that only hedges the developed market currencies in the index, to help reduce the costs of hedging.
The SPDR MSCI ACWI UCITS ETF is a market leader as the largest and lowest cost physically backed UCITS ETF tracking the MSCI ACWI Index.
USD typically gains/loses 30-35% during a bull/bear market over 6-10 years
How to play this theme:
SPDR offers a range of ETFs that allow investors to hedge their exposures. To learn more about these ETFs, and to view full performance histories, please follow the links below:
Sources: Bloomberg Finance L.P., for the period 2-9 September 2020. Flows are as of date indicated and should not be relied upon as current thereafter.
Marketing Communication. For Professional Client Use Only.
For Investors in Austria: The offering of SPDR ETFs by the Company has been notified to the Financial Markets Authority (FMA) in accordance with section 139 of the Austrian Investment Funds Act. Prospective investors may obtain the current sales Prospectus, the articles of incorporation, the KIID as well as the latest annual and semi-annual report free of charge from State Street Global Advisors GmbH, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89-55878-400. F+49 (0)89-55878-440.
Finland: The offering of funds by the Companies has been notified to the Financial Supervision Authority in accordance with Section 127 of the Act on Common Funds (29.1.1999/48) and by virtue of confirmation from the Financial Supervision Authority the Companies may publicly distribute their Shares in Finland. Certain information and documents that the Companies must publish in Ireland pursuant to applicable Irish law are translated into Finnish and are available for Finnish investors by contacting State Street Custodial Services (Ireland) Limited, 78 Sir John Rogerson’s Quay, Dublin 2, Ireland.
France: This document does not constitute an offer or request to purchase shares in the Companies. Any subscription for shares shall be ade in accordance with the terms and conditions specified in the complete Prospectuses, the KIID, the addenda as well as the Companies’ Supplements. These documents are available from the Company centralising correspondent: State Street Banque S.A., 23-25 rue Delariviere- Lefoullon, 92064 Paris La Defense Cedex or on the French part of the site spdrs.com. The Companies re undertakings for collective investment in transferable securities (UCITS) governed by Irish law and accredited by the Central Bank of Ireland as a UCITS n accordance with European Regulations. European Directive no. 2014/91/ EU dated 23 July 2014 on UCITS, as amended, established common rules pursuant to the cross-border marketing of UCITS with which they duly comply. This common base does not exclude differentiated implementation. This is why a European UCITS can be sold in France even though its activity does not comply with rules identical to those governing the approval of this type of product in France. The offering of these compartments has been notified to the Autorité des Marchés Financiers (AMF) in accordance with article L214- 2-2 of the French Monetary and Financial Code.
Germany: The offering of SPDR ETFs by the Companies has been notified to the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in accordance with section 312 of the German Investment Act. Prospective investors may obtain the current sales Prospectuses, the articles of incorporation, the KIIDs as well as the latest annual and semiannual report free of charge from State Street Global Advisors GmbH, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89-55878-400.
Ireland: State Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered number 145221. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Web: ssga.com.
Israel: No action has been taken or will be taken in Israel that would permit a public offering of the Securities or distribution of this sales brochure to the public in Israel. This sales brochure has not been approved by the Israel Securities Authority (the ‘ISA’).
Accordingly, the Securities shall only be sold in Israel to an investor of the type listed in the First Schedule to the Israeli Securities Law, 1978, which has confirmed in writing that it falls within one of the categories listed therein (accompanied by external confirmation where this is required under ISA guidelines), that it is aware of the implications of being considered such an investor and consents thereto, and further that the Securities are being purchased for its own account and not for the purpose of re-sale or distribution.
This sales brochure may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have been sent.
Nothing in this sales brochure should be considered investment advice or investment marketing as defined in the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (“the Investment Advice Law”). Investors are encouraged to seek competent investment advice from a locally licensed investment advisor prior to making any investment. State Street is not licensed under the Investment Advice Law, nor does it carry the insurance as required of a licensee thereunder.
This sales brochure does not constitute an offer to sell or solicitation of an offer to buy any securities other than the Securities offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person or persons to whom it is unlawful to make such offer or solicitation.
Italy: State Street Global Advisors Ireland Limited Milan Branch (Sede Secondaria di Milano) (“State Street Global Advisors Milan Branch”) is a branch of State Street Global Advisors Ireland Limited, registered in Ireland with company number 145221, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson’s Quay, Dublin 2. State Street Global Advisors Milan Branch is registered in Italy with company number 10495250960 - R.E.A. 2535585 and VAT number 10495250960, and its office is located at Via Ferrante Aporti, 10 - 20125 Milano, Italy. Telephone: (+39) 02 32066 100. Facsimile: (+39) 02 32066 155.
Netherlands: This communication is directed at qualified investors within the meaning of Section 2:72 of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht) as amended. The products and services to which this communication relates are only available to such persons and persons of any other description should not rely on this communication. Distribution of this document does not trigger a licence requirement for the Companies or SSGA in the Netherlands and consequently no prudential and conduct of business supervision will be exercised over the Companies or SSGA by the Dutch Central Bank (De Nederlandsche Bank N.V.) and the Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten). The Companies have completed their notification to the Authority Financial Markets in the Netherlands in order to market their shares for sale to the public in the Netherlands and the Companies are, accordingly, investment institutions (beleggingsinstellingen) according to Section 2:72 Dutch Financial Markets Supervision Act of Investment Institutions.
Norway: The offering of SPDR ETFs by the Companies has been notified to the Financial Supervisory Authority of Norway (Finanstilsynet) in accordance with applicable Norwegian Securities Funds legislation. By virtue of a confirmation letter from the Financial Supervisory Authority dated 28 March 2013 (16 October 2013 for umbrella II) the Companies may market and sell their shares in Norway.
Spain: State Street Global Advisors SPDR ETFs Europe I and II plc have been authorised for public distribution in Spain and are registered with the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores) under no.1244 and no.1242. Before investing, investors may obtain a copy of the Prospectus and Key Investor Information Documents, the Marketing Memoranda, the fund rules or instruments of incorporation as well as the annual and semi-annual reports of State Street Global Advisors SPDR ETFs Europe I and II plc from Cecabank, S.A. Alcalá 27, 28014 Madrid (Spain) who is the Spanish Representative, Paying Agent and distributor in Spain or at spdrs.com. The authorised Spanish distributor of State Street Global Advisors SPDR ETFs is available on the website of the Securities Market Commission (Comisión Nacional del Mercado de Valores).
Switzerland: The collective investment schemes referred to herein are collective investment schemes under Irish law. Prospective investors may obtain the current sales prospectus, the articles of incorporation, the KIID as well as the latest annual and semi-annual reports free of charge from the Swiss Representative and Paying Agent, State Street Bank International GmbH, Munich, Zurich Branch, Beethovenstr. 19, 8027 Zurich, as well as from the main distributor in Switzerland, State Street Global Advisors AG, Beethovenstrasse 19, 8027 Zurich. Before investing please read the prospectus and the KIID, copies of which can be obtained from the Swiss representative, or at ssga.com/etfs.
United Kingdom: The Companies are recognised schemes under Section 264 of the Financial Services and Markets Act 2000 (“the Act”) and are directed at ‘professional clients’ in the UK (within the meaning of the rules of the Act) who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates are only available to such persons and persons of any other description should not rely on this communication. Many of the protections provided by the UK regulatory system do not apply to the operation of the Companies, and compensation will not be available under the UK Financial Services Compensation Scheme.
This document has been issued by State Street Global Advisors Ireland (“SSGA”), regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered number 145221. T: +353 (0)1 776 3000. Fax: +353 (0)1 776 3300. Web: ssga.com.
Diversification does not ensure a profit or guarantee against loss.
SPDR ETFs is the exchange traded funds (“ETF”) platform of State Street Global Advisors and is comprised of funds that have been authorised by Central Bank of Ireland as open-ended UCITS investment companies.
State Street Global Advisors SPDR ETFs Europe I & II plc issue SPDR ETFs, and is an open-ended investment company with variable capital having segregated liability between its sub-funds. The Company is organised as an Undertaking for Collective Investments in Transferable Securities (UCITS) under the laws of Ireland and authorised as a UCITS by the Central Bank of Ireland.
The information provided does not constitute investment advice. It should not be considered a solicitation to buy or an offer to sell any investment. It does not take into account any investor’s or potential investor’s particular investment objectives, strategies, tax status, risk appetite or investment horizon. If you require investment advice you should consult your tax and financial or other professional advisor. All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
ETFs trade like stocks, are subject to investment risk and will fluctuate in market value. The investment return and principal value of an investment will fluctuate in value, so that when shares are sold or redeemed, they may be worth more or less than when they were purchased. Although shares may be bought or sold on an exchange through any brokerage account, shares are not individually redeemable from the fund. Investors may acquire shares and tender them for redemption through the fund in large aggregations known as “creation units.” Please see the fund’s prospectus for more details.
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The views expressed in this material are the views of SPDR EMEA Strategy & Research through the period ending 11 September 2020 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Past performance is not a guarantee of future results.
All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.
Investing in foreign domiciled securities may involve risk of capital loss from unfavourable fluctuation in currency values, withholding taxes, from differences in generally accepted accounting principles or from economic or political instability in other nations.
Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates raise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.
Investments in emerging or developing markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.
Standard & Poor’s, S&P and SPDR are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation’s financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
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The Fund/share class may use financial derivatives instruments for currency hedging and to manage the portfolio efficiently. The Fund may purchase securities that are not denominated in the share class currency. Hedging should mitigate the impact of exchange rate fluctuations however hedges are sometimes subject to imperfect matching which could generate losses.
Equity securities may fluctuate in value in response to the activities of individual companies and general market and economic conditions.
The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss Regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.
SPDR ETF ist die Plattform von State Street Global Advisors für Exchange-Traded Funds ("ETF") und besteht aus Fonds, die von den europäischen Aufsichtsbehörden als OGAW (offene Investmentgesellschaften) zugelassen wurden. Die ETFs dieser Plattform sind möglicherweise für Sie nicht geeignet oder verfügbar.
ETFs werden wie Aktien gehandelt und unterliegen dem Anlagerisiko. Ihr Marktwert fluktuiert und die Kurse können über oder unter dem Nettoinventarwert der ETFs notieren. Maklerkommissionen und ETF-Gebühren beeinträchtigen die Rendite.
Wechselkursschwankungen können sich negativ auf den Wert, Preis oder den Ertrag einer Anlage auswirken. Es gibt zudem keine Garantie dafür, dass ein ETF sein Anlageziel erreicht.
ANTEILE AN DEN FONDS DER SPDR® ETF SICAV, SSGA SPDR ETFS EUROPE I PLC UND SSGA SPDR ETFS EUROPE II PLC SIND EVENTUELL NICHT FU00DCR SIE ZUGU00C4NGLICH ODER GEEIGNET. DIE AUF DIESER SEITE ZUM AUSDRUCK GEBRACHTEN ANSICHTEN STELLEN KEINE ANLAGEBERATUNG DAR. IM ZWEIFEL SOLLTE UNABHÄNGIGER RAT EINGEHOLT WERDEN. WEDER DIE INFORMATIONEN NOCH DIE MEINUNGSÄUSSERUNGEN AUF DIESER SEITE STELLEN EINE AUFFORDERUNG ZUM KAUF ODER VERKAUF VON ANTEILEN DER FONDS ODER EINES SONSTIGEN FINANZINSTRUMENTES DAR.
Standard & Poor's®, S&P® et SPDR® sind eingetragene Warenzeichen der Standard & Poor's Financial Services LLC (S&P); Dow Jones ist ein eingetragenes Warenzeichen der Dow Jones Trademark Holdings LLC (Dow Jones); und diese Warenzeichen wurden zur Nutzung durch die S&P Dow Jones Indices LLC (SPDJI) lizenziert und für bestimmte Zwecke an die State Street Corporation unterlizenziert. Die Finanzprodukte der State Street Corporation werden von SPDJI, Dow Jones, S&P, deren jeweiligen Konzerngesellschaften und Drittlizenzgebern nicht gefürdert, empfohlen, verkauft oder beworben, und keine dieser Parteien gibt Zusicherungen hinsichtlich der Ratsamkeit einer Anlage in dieses Produkt bzw. diese Produkte ab, noch haften sie im Zusammenhang damit, für Fehler, Auslassungen oder Unterbrechungen bei einem Index, oder in sonstiger Weise.
SPDR ETFs dürfen ausschliesslich in jenen Gerichtsbarkeiten angeboten bzw. verkauft werden, in denen sie im Einklang mit den geltenden Vorschriften zugelassen sind.
Informationen zu Mexiko
Diese Informationen stellen kein Marketing bzw. kein Angebot von Wertpapieren dar und sind auch nicht dazu bestimmt und nicht derart auszulegen. Die hierin genannten Fonds wurden und werden nicht nach dem mexikanischen Wertpapiermarktgesetz (Ley del Mercado de Valores) registriert und dürfen in den Vereinigten Mexikanischen Staaten nicht öffentlich angeboten oder verkauft werden. Offenlegungsunterlagen im Zusammenhang mit einem der oben aufgeführten Fonds dürfen in Mexiko nicht öffentlich vertrieben werden, und Anteile der Fonds dürfen nicht in Mexiko gehandelt werden.
Vor einer Anlage sollten Sie einen Prospekt und KIID für SPDR ETFs anfordern und lesen. Personen mit Domizil in Ländern, in denen SPDR ETFs für den Verkauf zugelassen sind, können weitere Informationen und den Prospekt/KIID, der die Eigenschaften, Kosten und Risiken der SPDR ETFs beschreibtverkoop op de website SPDRs und von ihrem lokalen SSGA-Büro abrufen.