Wednesday, March 11, 2015

Investing Improving Europe Equity with ETF

(Reuters) - U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency.
The biggest among so-called "currency hedged" ETFs, the WisdomTree Europe Hedged Equity ETF, has already added some $576 million in new money since last Friday, and nearly $1 billion since the start of the year, data show.
"Currencies have become a huge part of global equity returns," said Art Laffer Jr., a Nashville investment manager who uses a currency hedged ETF for his exposure to Germany.
A currency hedged ETF strips out the foreign currency return of a given fund by investing in foreign currency forward contracts and rolling them, typically on a monthly basis. This can have a major impact on returns for U.S. investors in a region like Europe, where the euro has dropped dramatically.
(Read More…)
Source:, Fri Jan 23, 2015 2:20pm EST

Performance: VGK vs. HEDJ

Let’s look at Jan 2015 as ECB launched QE in this period

VGK = Vanguard FTSE Europe ETF – non-hedged (Blue Line)

HEDJ = WisdomTree Europe Hedged Equity ETF – hedged (Red Line)