ETF provider Source has launched two new Ucits products to focus on Eurozone and Japanes exporters.
Source Stoxx Eurozone Exporters Ucits ETF and the Source Stoxx Japan Exporters Ucits ETF, which track the new Stoxx International Exposure Indices, will focus on those companies in the Eurozone and Japan that have a majority of non-domestic revenues.
The move comes as both the ECB and Bank of Japan’s QE programmes will offer the potential for weaker currencies to boost exporter’s earnings, says Source.
Source president Peter Thompson says the new indices ”will enable investors to construct their portfolios more precisely by using revenue-based indexing. We identified a particular need from our investors to gain more targeted exposure to the topical themes of currency devaluation and quantitative easing.”
Source claims that the indices’ analysis of underlying revenues can reveal important characteristics that are ignored by traditional market cap weighted indices.
According to Stoxx’s analysis only around 33 per cent of the revenues of the largest 600 Japanese companies are derived from overseas earnings.
Source states: “If an investor believes that quantitative easing by the Bank of Japan will weaken the yen and, in turn, improve the profitability of Japanese exporters, they may wish to consider the new Stoxx Japan International Exposure Index, which roughly doubles that foreign revenue exposure to 65 per cent.”
Both funds will have management fees of 0.35 per cent.