Once European economies turn around, investors could utilize a hedged-equity exchange traded fund to capture a more pure Europe exposure, without having to worry about currency risks.
On the recent webcast, Currency Hedging Strategies, Britta Weidenbach, managing director at Deutsche Asset and Wealth Management, explains how the continued low inflation and weaker economic data in the Eurozone will provide the European Central Bank with greater room to enact stimulus measures.
As the loose monetary policies run their course, the economy could strengthen and the euro currency could further depreciate against the U.S. dollar. Consequently, investors interested in Europe exposure but are concerned about currency risks can take a look at the Deutsche X-Trackers MSCI Europe Hedged Equity ETF (NYSEArca: DBEU). According to a recent survey, the majority of advisors are looking for the best ways to implement currency hedged strategies in as people try to limit risk with overseas investments.
Potential investors, though, should be aware that DBEU includes broad European exposure. The United Kingdom and Switzerland make up a combined 43.2% weight in the ETF’s portfolio.
The looser ECB policies seem to be doing the trick as Eurozone banks are reporting improved loan demand. Corporate, mortgage lending and consumer credit have all been steadily rising since 2012.