Podcasts & Videos

Mitigate Currency Exposure in Your International Investments

July 28, 2015
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.

 

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.

tripp
Tripp Zimmerman, CFA
Director, Research
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gannatti
Christopher Gannatti, CFA
Head of Research, Europe
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