Country-specific exchange traded funds (ETFs) aren’t hedged against the U.S. dollar. As a country’s currency appreciates, you might see better returns for that country’s ETF. For example, the iShares MSCI United Kingdom ETF (EWU) has been a solid performer because of a rising currency and continued economic growth, Carl Delfeld for ETF XRAY reports. EWU is up 9% year-to-date, and CurrencyShares British Pound Sterling (FXB) is up 5%.
Conversely, recent demand for carry trade helped drive down the yen’s value. iShares MSCI Japan Index (EWJ) was down 1.4% for the week (through Thursday), but it gained on 1% Friday.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.