Australian exchange traded fund manager BetaShares has launched the BetaShares Global Gold Miners ETF – Currency Hedged (ASX: MNRS) and the BetaShares Global Banks ETF – Currency Hedged (ASX: BNKS).
Both MNRS and BNKS are hedged into Australian dollars to eliminate the impact of currency fluctuations on portfolio performance, making the two ETFs unique in the Australian market.
MNRS aims to track an index comprising of 40 of the largest global (ex Australia) gold miners. As of the end of June 2016, this index had a combined market capitalisation of AUD308 billion – significantly more than the combined value of the gold miners available on the Australian stock exchange, which had a value of AUD25 billion.
“Gold’s value as a port in the storm during bouts of global financial market volatility has been proven time and time again,” says Alex Vynokur, Managing Director of BetaShares.
“Through MNRS, investors can obtain diversified exposure to leading gold miners across the globe – which significantly expands upon the limited number of Australian gold miners. The fact that MNRS is currency hedged is, in our view, very important for Australian investors, as the Australian dollar has tended to be positively correlated with the $US gold price over time. That means in periods when the gold price is rising, Australian investors in global gold mining companies, without currency hedging, could potentially miss some of the upside, or in fact suffer losses, due to foreign exchange movements associated with their offshore investment exposure. MNRS aims to take the currency risk out of the equation,” says Vynokur.
BNKS aims to track an index comprising the largest global (ex Australia) banks by market capitalisation, offering exposure to 60 of the world’s most important banking powerhouses including JP Morgan Chase, Wells Fargo and HSBC.
“Australian banks have long formed an important part of many investor portfolios, thanks to their relatively large weight on the Australian stock exchange and attractive dividend returns. That said, by global standards, Australian banks appear relatively expensive on some valuation measures and are quite exposed to the fortunes of the local housing sector,” says Vynokur.
“BNKS has an important benefit for investors, as by diversifying their banking exposure on an international scale, they can reduce Australian country-specific risk in general, and risks associated with the Australian housing sector in particular.”
These two products are part of the ‘Global Sectors Series’ from BetaShares – a group of five ETFs designed to provide investors with access to some of the world’s most significant companies, across a broad range of industries. The first of this series, the BetaShares Global Energy Companies ETF – Currency Hedged (ASX: FUEL) launched in July