European equities are expected to rebound as the Eurozone economy lifts itself out of a prolonged recession. Investors interested in capturing the growth story should look to hedged-equity exchange traded fund options to help limit any potential currency risk.
In the upcoming webcast, European Growth with Currency Protection ETF, Luke Oliver, Head of Capital Markets and Passive Investments at Deutsche Asset and Wealth management, Dodd Kittsley, Head of ETF National Accounts & Strategy at Deutsche Asset and Wealth Management, and Scott Kubie, Chief Investment Strategist at CLS Investments, will discuss opportunities in the Eurozone economy and currency risk that investors should look out for.
Investors have a number of reasons to take a look at European markets. For instance, Eurozone states are getting their finances in order and have diminished their public deficits after years of austerity measures.
As the economy improves and businesses confidence rises, profits should begin to increase. Moreover, European companies have historically held onto their cash positions, making them less at risk than their debt-ladened governments.
Moreover, overseas markets show attractive valuations, compared to the U.S. equities market, especially after the bull rally here at home.
Meanwhile, with the European Central Bank adhering to a loose monetary policy, the euro currency is more at risk of depreciating against the U.S. dollar. Consequently, investors who are bullish on the Eurozone economy may be up against a bearish euro currency outlook – foreign investment returns are usually denominated in their local currency, so a weakening euro currency translates to lower U.S. dollar-denominated returns. [Investors Piled Into These ETFs Ahead of ECB Meeting]
Consequently, investors can consider investment strategies like the db X-Trackers MSCI Europe Hedged Equity Fund (NYSEArca: DBEU), which provides exposure to European markets while hedging against a depreciating euro. DBEU tracks 16 developed European stock markets, including Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
For more information on Europe, visit our Europe category.
Financial advisors who are interested in learning more about hedging currency risk with European equity exposure can register for the Wednesday, July 16 webcast here.