The combination of the weak euro and the sliding British pound has driven DBEU up 3.7% over the past month and it has taken the ETF less than a year of trading to get to $277 million in assets under management. [Time is Right for This Currency Hedged ETF]
Products like DXJ, HEDJ, DBEU and the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEArca: DBJP) are among the better stories from the world of currency hedged ETFs, but that does not mean all of these funds are perfect.
Emerging markets hedged currency ETFs because “built into the cost of hedging a currency is its nation’s interest rates. But emerging-market rates are much higher than the negligible ones in Europe and Japan. To hedge the real, for instance, Brazil’s 11% interest rate will factor into the cost,” according to Barron’s.
Hedged U.K. ETFs struggled earlier this year as the pound rose while hedge South Korea ETFs are still dealing with the effects of a persistently strong won.
WisdomTree Europe Hedged Equity Fund