Earlier this year, the International Monetary Fund and even New Zealand’s own prime minister have called the kiwi overvalued. ENZL is not a hedged currency fund, but New Zealand’s industrial firms have been clamoring for a weaker dollar. The Reserve Bank of New Zealand has not obliged, proving reluctant to lower interest rates or engage in quantitative easing, a stark departure from the game plan employed by other developed world central banks.
In fact, it is widely expected that RBNZ will raise rates early next year. If ENZL’s past performance is any indication, it may not matter to the ETF if the kiwi gets stronger, underscoring the dichotomy of kiwi strength and ENZL upside.
iShares MSCI New Zealand Capped ETF
ETF Trends editorial team contributed to this post.