VanEck has announced the launch of three new AUD hedged international equity ETFs which will allow investors to manage their currency exposure.
The three funds include the VanEck MSCI International Small Companies Quality (AUD Hedged) ETF (QHSM), the VanEck MSCI International Value (AUD Hedged) ETF (HVLU), and the VanEck Morningstar Wide Moat (AUD Hedged) ETF (MHOT).
These three ETFs, which will be listed on the ASX on Thursday, leverage off VanEck’s existing popular international equity strategies. The ETF provider explained that it is launching the new funds following significant demand from investors and advisers.
“We’re seeing an increasing number of investors seeking out international exposures and growing the international allocation within portfolios,” said Arian Neiron, VanEck chief executive officer and managing director, Asia-Pacific.
“As more money flows offshore, the currency hedging decision, which can depend on an investor’s risk profile and movement of the Australian dollar, is becoming increasingly important.”
According to VanEck, QHSM is a currency hedged version of the VanEck MSCI International Small Companies Quality ETF (QSML), HVLU is a currency hedged version of the VanEck MSCI International Value ETF (VLUE), and MHOT is a currency hedged version of the VanEck Morningstar Wide Moat ETF (MOAT).
As part of its announcement, the ETF provider highlighted the importance of the decision to hedge currency exposure, given that a local currency appreciation can reduce returns from an international investment while a depreciation can enhance returns.
“These new funds will provide investors with the opportunity to target return outcomes by managing their Australian dollar exposure with proven smart beta international equity strategies,” said Mr Neiron.
He added, “2022 and 2023 have both demonstrated to investors that being selective across the investment universe by employing systematic approaches has many advantages including, but not limited to, targeting return outcomes, avoiding ‘junk’, improving transparency and cost effectiveness.”
MOAT, which launched on the ASX in 2015, has amassed $691 million in total net assets. QSML and VLUE, which both launched on the ASX in 2021, have $238 million and $210 million in total net assets, respectively.
“In light of US equity valuations, particularly the S&P 500, investors are looking for hyper-selective strategies that considers fundamentals and improved risk-adjusted returns over the long term,” Mr Neiron noted.
“In an environment of heightened uncertainty and with central banks looking close to reaching peak rates, both QSML and MOAT have outperformed their respective benchmarks over the last 12 months.”
