Xtrackers MSCI All World ex US Hedged Equity ETF (DBAW) seeks to track the MSCI All Country World ex USA Index while hedging currency exposure back to USD. This index measures the performance of large- and mid-cap stocks across 22 developed and 24 emerging markets, excluding U.S. companies, providing comprehensive international equity exposure.
How It Works
DBAW uses a passively managed, market-capitalization-weighted approach that mirrors its benchmark index while employing currency hedging to minimize foreign exchange fluctuations against the U.S. dollar. The fund holds approximately 2,400 international stocks proportional to their market values, with quarterly rebalancing to maintain index alignment. Currency hedging is implemented through forward contracts that are typically rolled monthly, aiming to neutralize the impact of currency movements on returns for USD-based investors.
Key Features
- Currency hedging eliminates foreign exchange risk, providing pure international equity exposure without currency volatility for U.S. investors
- Comprehensive coverage of both developed and emerging markets outside the U.S., spanning over 45 countries for true global diversification
- Low expense ratio structure typical of Xtrackers passive ETFs, though specific costs may vary based on hedging implementation
Risks
- This ETF can lose value when international markets decline, potentially dropping 40-50% during global bear markets like 2008-2009 or COVID-19 crash
- Currency hedging costs and tracking error can create performance drag versus unhedged international funds, especially during volatile FX periods
- Emerging market exposure adds political risk, liquidity constraints, and higher volatility compared to developed market-only international ETFs
Who Should Own This
Best suited as a core international holding (20-40% of equity allocation) for long-term investors with 5+ year time horizons seeking global diversification without currency risk. Medium-to-high risk tolerance required due to international equity volatility. Ideal for U.S.-based investors who want international exposure but prefer to avoid foreign exchange fluctuations in their portfolio returns.