DBGR and the rival WisdomTree Germany Hedged Equity Fund (NasdaqGM: DXGE) are up an average of 3% this year.
The db X-Trackers MSCI Europe Hedged Equity Fund (NYSEArca: DBEU)has $116.5 million in assets, almost 92% of which has come into the fund this year. DBEU allocates almost 43% of its combined weight to the U.K. and Switzerland and another combined 6.6% to Sweden and Denmark. None of those countries use the euro.
That means DBEU is exposed to two developed market currencies that arguably overvalued – the euro and the British pound. With the U.K. economy improving, it appears unlikely the Bank of England will take steps to actively weaken the pound, but if sterling does decline with British equities remaining firm, DBEU is among the ETFs that would benefit. [A Falling Pound Would Lift These ETFs]
WisdomTree Europe Hedged Equity Fund
Tom Lydon’s clients own shares of HEDJ.