The Xtrackers II USD Overnight Rate Swap UCITS ETF 1C (XFFE) is a Luxembourg-domiciled money market ETF managed by DWS through its Xtrackers platform and traded on the London Stock Exchange.

The fund seeks to track the performance of the Solactive FEDL Daily Total Return Index, a benchmark designed to reflect a notional U.S. dollar position earning the Federal Funds Effective Rate, a key reference rate for overnight lending in the U.S. money market.

XFFE provides exposure to U.S. short-term interest rates through a passive investment strategy. The fund uses synthetic replication, relying on swap agreements rather than directly holding a portfolio of instruments designed to economically replicate the benchmark rate.

The Solactive FEDL Daily Total Return Index tracks daily exposure to the Federal Funds Effective Rate, with interest incorporated into the notional U.S. dollar position. As a result, the benchmark's performance is directly linked to changes in the effective federal funds rate and short-term U.S. monetary conditions.

Composition / Exposure Profile

Unlike a conventional equity or bond ETF, XFFE does not seek exposure to companies, economic sectors, or a traditional bond portfolio. Its economic exposure is primarily linked to:

• The Federal Funds Effective Rate.

• The U.S. money market.

• Synthetic exposure through swaps.

• Assets held within the fund structure to support synthetic replication.

The strategy provides notional exposure to U.S. dollar overnight interest rates. Its performance therefore tends to reflect changes in the Federal Funds Effective Rate, which responds to monetary conditions and Federal Reserve policy.

The use of swaps also introduces counterparty risk because the fund relies on financial institutions to meet their obligations under the derivative agreements.

Structure and costs

XFFE has the U.S. dollar as both its fund currency and share class currency. The ETF has a total expense ratio (TER) of 0.10% per year, uses synthetic replication through swaps, and is domiciled in Luxembourg under the UCITS framework. The fund is a sub-fund of Xtrackers II.

The 1C share class follows an accumulating income policy, meaning income generated by the strategy is retained within the fund rather than distributed periodically to shareholders.

History and Evolution of the ETF

The Xtrackers II USD Overnight Rate Swap UCITS ETF 1C (XFFE) was launched in 2007 to provide exchange-traded exposure to U.S. overnight interest rates.

Throughout its history, the fund has maintained a synthetic strategy designed to track a benchmark based on the Federal Funds Effective Rate. In 2023, its benchmark was changed to the Solactive FEDL Daily Total Return Index while preserving its underlying economic exposure to U.S. dollar overnight rates.

Over time, the fund's performance has reflected different U.S. monetary-policy cycles, including periods of near-zero interest rates as well as Federal Reserve tightening and easing cycles.

Additional Information

Xtrackers II USD Overnight Rate Swap UCITS ETF 1C (Ireland) is an exchange-traded fund (ETF), with assets under management totaling $366.05 million.

Over the past 12 months, Xtrackers II USD Overnight Rate Swap UCITS ETF 1C recorded a return of 3.76%, with its price trading between $208.10 and $216.00 during the same period.

The ETF is traded under the ticker XFFE.