- Autopilot Hedged ETF can help ride out potential shifting trends in the euro currency
- Prior to December last year, ETF investors could hedge in only one direction
- Investors can automatically switch between hedged and unhedged positions with BATS PAEU
With the foreign exchange market proving to be unpredictable at times, investors interested in European market exposure may want to turn to a a so-called Autopilot Hedged exchange traded fund to ride out potential shifting trends in the euro currency.
Prior to December last year, ETF investors could hedge in only one direction. With the Pacer Autopilot Hedged European Index ETF (BATS PAEU), investors can automatically switch between hedged and unhedged positions to take advantage of the U.S. dollar/euro currency exchange rate.
PAEU tracks a rules-based index strategy to provide exposure to the Eurozone while relying on a hedging trigger to predict currency fluctuations to help investors diminish currency risks when investing overseas.
“When the dollar weakens, return on international investment increases,” Pacer ETFs said. “When the dollar strengthens, return on international investment decreases.”
Consequently, PAEU is designed to alternate between hedged and unhedged position on a monthly basis in an attempt to capitalize on fluctuations in exchange rates.