Mitigate Currency Exposure in Your International
Summary: Currencies add volatility to international equity returns, without providing much potential for returns themselves. So, what’s an investor to do? Find out in our latest podcast. -- Recorded June 19, 2015. The DXUS and HDLS Funds are new and have limited operating history. Diversification does not eliminate the risk of experiencing investment losses. DXJ: WisdomTree Japan Hedged Equity Fund HEDJ: WisdomTree Europe Hedged Equity Fund IHDG: WisdomTree International Hedged Dividend Growth Fund DXGE: WisdomTree Germany Hedged Equity Fund EUSC: WisdomTree Europe Hedged SmallCap Equity Fund DXUS: WisdomTree Global ex-U.S. Hedged Dividend Fund HDLS: WisdomTree International Hedged SmallCap Dividend Fund ETFs: exchange-traded funds Hedge: Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract. MSCI EAFE Index: A market cap-weighted index composed of companies representative of the developed market structure of 21 developed countries in Europe, Australasia and Japan. Volatility: A measure of the dispersion of actual returns around a particular average level. Interest rates: The rate at which interest is paid by a borrower for the use of money Forward contracts: Agreements to buy or sell a specific currency at a future date at an agreed upon rate. Short-term interest rates: The rate of interest on a debt instrument maturing in two years or less. Short: The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value, the opposite of long (or long position) Prime Minister Abe: Japanese prime minister Shinzo Abe was elected into office on December 16, 2012, and has enacted a series of policies aimed at stimulating Japan’s economic growth. “Don’t Layer Currency Risk on Top of Equity Exposure” white paper. Hedging can help returns when a foreign currency depreciates against the U.S. dollar, but can hurt when the foreign currency appreciates against the U.S. dollar.