Currency Hedged ETF Craze Just Starting

While there is not yet currency hedged ETF for Australia, the Deutsche X-Trackers MSCI Asia Pacific ex Japan Hedged Equity ETF (NYSEArca: DBAP) is a good proxy due to its weight of over 20% to Australian equities. DBAP is up almost 3% this year. [A Currency Hedged ETF Right for the Times]

It is also important to remember the current dollar bull cycle is not yet in the late innings. The 2002 to 2010 bear market for the dollar saw the greenback lose nearly 33%, but as Kittsley has previously noted, dollar bull markets can last up to eight years or longer.

Increasing the allure of ETFs such as DBEF, DBEU and DBAP are these factoids. First, there is no shortage of market observers predicting EUR/USD parity and/or the common currency falling below $1. Second, of the nine ETFs that hit all-time highs Tuesday, three were inverse euro ETFs. Another was a bearish Australian dollar fund.

Currency Hedged ETF Asset Growth

Chart Courtesy: Deutsche Bank