For example, the Deutsche X-Trackers MSCI Europe Hedged Equity ETF (NYSEArca: DBEU) and WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) are among the two largest options available. The ETFs hedge against the euro currency and would outperform a non-hedged Europe equity ETF if the euro currency depreciates. Potential investors should note that these ETFs could underperform a non-hedged ETF in the event the euro strengthens. DBEU has a 15.5 P/E and a 1.7 P/B while HEDJ has a 16.7 P/E and a 1.9 P/E. [Currency Hedged ETFs for Exploiting ECB Easing]
DBEU takes a slightly broader approach to the European markets. Specifically, the Deutsche Bank offering includes a 28.4% position in United Kingdom stocks and 14.8% in Switzerland. In contrast, HEDJ only tracks Eurozone members. DBEU also leans toward financial sector names at 22.8% of its portfolio, followed by consumer staples 18.9% and industrials 9.8%. Meanwhile HEDJ tilts toward consumer staples 22.2%, followed by industrials 18.8% and consumer discretionary 17.3%.
Investors who want to compare the non-hedged to the hedged equity ETFs can also look at the iShares Currency Hedged MSCI EMU ETF (NYSEArca: HEZU), the euro-hedged version of EZU. Over the past three months, HEZU has increased 4.1%, whereas EZU declined 2.2% as the euro currency depreciated 2.1% against the USD.
For more information on Europe, visit our Europe category.
Max Chen contributed to this article.