Xtrackers II Eurozone Government Bond 7-10 UCITS ETF 2C - USD Hedged

Issuer: Xtrackers

Asset Class: Fixed Income

TER: 20bps

Trading Currency: USD

Pays Income: False

Listing Date: 18 Oct 2022

Ticker: X71U

ISIN: LU2523865991

This investment vehicle offers precise exposure to the intermediate-term segment of the Eurozone sovereign debt market. The fund aims to replicate the performance of an index composed of fixed-rate, euro-denominated government bonds issued by member states of the Eurozone. Specifically, it targets bonds with a remaining maturity of between seven and ten years. This focus on the 7-10 year maturity range provides a balance between yield and interest rate sensitivity, positioning it as a core component for investors seeking stable income and portfolio diversification away from more volatile asset classes like equities. The underlying holdings consist of high-quality debt instruments from various developed European nations, offering a degree of credit safety inherent in government-issued securities.

Given its specific duration exposure, the fund's value is moderately sensitive to shifts in the European Central Bank's monetary policy and broader interest rate environment. An expectation of falling interest rates would likely increase the fund's net asset value, while rising rates would have the opposite effect. This makes it a useful tool for investors looking to express a view on the direction of European interest rates or to manage the overall duration risk within a diversified fixed-income portfolio. As an accumulating share class, all coupon payments received from the underlying bonds are automatically reinvested back into the fund. This process facilitates the power of compounding over time, enhancing total returns without requiring active intervention from the investor, making it a convenient and efficient option for long-term strategic asset allocation.