Inside the Latest High Dividend ETF from Deutsche Bank (FIEG) - ETF News And Commentary
October 26 2013 - 11:25AM
Zacks
The investing world has seen a rise in the number of ETFs so far
this year, as investors continue to embrace options in this market.
Thanks mainly goes to a wide range of investment products in the
space, which keep investors attracted despite the ups and downs in
the market (Read: 3 Niche ETFs Crushing the Market).
Total products in the space now number over 1,500, with over $1.5
trillion in assets under management, suggesting a wide level of
interest by many investors. Yet, despite this large number of
products, some issuers haven’t stopped putting out new funds into
the market, and especially so in the dividend space.
This trend continues with Deutsche Bank, a popular German firm
which holds a plethora of U.S. listed exchange-traded products. The
company just put out another dividend-focused ETN, and we have
highlighted some of the key points regarding this fresh product
below (Read: Deutsche Bank Launches 3 More Hedged Equity ETFs).
FI Enhanced Global High Yield Exchange Traded Note
(FIEG)
This ETN gives a targeted exposure to a recuperating Europe, while
it is best suited for high net-worth investors. This is the third
ETN launched by Deutsche Bank recently following 2 other ETN
launches in the similar category giving exposure to blue chip
European institutions (Read: Europe ETF investing 101).
FIEG tracks the MSCI World High Dividend Yield USD Gross Total
Return Index and seeks a 2x or twice leveraged daily return of its
index.
In terms of FIEG fees and expenses, the calculation is pretty
comprehensive as the Sec filing shows the calculation mentioned
here: “Current principal amount × (initial leverage factor × index
performance – 1 – investor fee on such trading day.”
This ETN is expected to charge a fee which will be based on its
index’s performance and the three-month U.S. dollar London
inter-bank offered rate (LIBOR). A fee of 0.1% may be charged by
the bank for repurchase and in case the product’s benchmark sheds
above 40%, the principal amount of the securities will be reset for
a fee of 0.05% (Read: New Income ETF Launches: RiverFront Strategic
Income Fund).
Meet the Competitors
FIEG faces direct competition from its predecessors,
the
Barclays ETN+ FI Enhanced Europe 50 ETN
(FEEU) and
Credit Suisse FI Enhanced Europe 50 ETN
(FIEU). All these ETNs are aligned around the index which
is composed of the top 50 European blue chip companies selected
from the world of 600 stocks comprising the Stoxx Europe 600 Index
(Read: Switzerland ETFs: Safest Play in Europe?).
The products look to be in focus for those seeking to play a
resurgent Europe, but with a focus on income. This approach could
definitely be accomplished by FIEG, though volatility levels look
to be extremely high with this new ETN.
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FI ENHNC EU 50 (FEEU): ETF Research Reports
FI-ENH GL HI YL (FIEG): ETF Research Reports
CS-FI ENH EUR50 (FIEU): ETF Research Reports
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