Investors can reduce the risk of loss from fluctuations in exchange rates by hedging with foreign currency. Hedging simply involves taking on on risk to offset another. Foreign currency risk comes from potential changes in the exchange rate of one currency in relation to another. [ETFs That Hedge Their Foreign Currency Exposure]
DXJ hedges its Japanese yen exposure by holding currency forward and futures contracts. EWJ does not hedge currency risk.
WisdomTree Japan Hedged Equity
Tisha Guerrero contributed to this article.