In other words, the rate of return for a U.S investor who has exposure in Brazilian equities in the iShares MSCI Brazil Index (NYSEArca: EWZ) for instance, is 8%, denominated in the Brazilian real. If during that time the U.S. dollar appreciates 6% against the real, the true rate of return on the investment is actually 2%. [Revamped Europe ETF Hedges Euro Currency Risk]
In response to this there are currency-hedged ETFs that can cut out currency risk against the appreciation of the greenback. However, investor interest in ETFs such as the following have lagged behind other funds that include the factor.
- WisdomTree Japan Hedged Equity ETF (NYSEArca: DXJ) The largest currency-hedged ETF with $204.66 million in assets. Up 0.89% year-to-date through September.
- WisdomTree International Hedged Equity Fund ETF (NYSEArca: HEDJ) The fund has $24.82 million, and has returned 6.74% year-to-date through September.
WisdomTree Japan Hedged Equity ETF
Tisha Guerrero contributed to this article.