HEDJ & the Beauty of a “Plain Vanilla” Approach
ECB president Mario Draghi has stated that returning the ECB’s balance sheet to March 2012 levels—an expansion of 1 trillion euros from current levels—is a primary policy goal.2 Since this policy, along with any other designed to stoke inflationary potential, should encourage a weakening of the euro, we think that hedging the currency risk and focusing on plain-vanilla exposure solely to European equities is an important consideration. We’ve seen from HEDJ’s results that it can have a big impact on the returns experienced over time.
1Source: Morningstar. Refers to period 10/31/13–10/31/14.
2Source: Sumanta Dey, “ECB must expand balance sheet by 1 trillion euros to lift inflation,” Reuters, 10/29/14.
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