With its heavy tilt toward large, multi-national companies, the DAX index is benefiting from a depreciating euro currency. A weaker euro would help support export growth and potentially generate greater revenue from overseas operations for the multi-nationals.
The euro hedged Germany ETFs are case studies in the advantages of currency hedging in a strong dollar environment. Year-to-date, the unhedged EWG is up 9.2%, but the aforementioned trio of Germany hedged ETFs are up an average of 20.6% this year.
“For example, if you were invested in Europe last year, you may have expected a positive return based on the performance of European stocks. However, because the U.S. dollar strengthened against the euro, your return would have been negatively impacted when converted back into dollars. In fact, international developed markets, emerging markets, Europe, Germany, and Japan all had positive returns in their local currencies but registered losses in dollars last year,” according to iShares. [Investors Rush to Germany ETFs]
iShares Currency Hedged MSCI Germany ETF
ETF Trends editorial team contributed to this post.