Currency Hedged ETFs for Exploiting ECB Easing

Since the start of the fourth quarter, the DBEUhas added over $194 million in new assets and that is after the ETF doubled in size in a single day earlier this year. [These ETFs Have Doubled in Size This Year]

While DBEU allocates nearly 44% to non-Eurozone members the U.K. and Switzerland, the ETF’s Eurozone exposure is still hefty with over 42% of its weight allocated to France, Germany, the Netherlands, Spain and Italy.

DBEU represents an important case study in the advantages of currency hedged ETFs. While the ETF’s year-to-date gain of 0.6% is not jaw dropping, it is stellar compared to the 9% lost by the Vanguard FTSE Europe ETF (NYSE: VGK). VGK has comparable country allocations to DBEU, including the large U.K. and Switzerland weights, but is not currency hedged.

ECB Balance Sheet

Chart Courtesy Deutsche Asset & Wealth Management