However, some of that potential equity gain can erode when your investment in the eurozone is translated back into the stronger dollar. That’s why currency hedged investments in Europe and Germany should be considered for the near term.
Potential ways to access the European markets
An easy way to access these markets while hedging against currency risk is through the iShares Currency Hedged MSCI Germany ETF (HEWG) and iShares Currency Hedged MSCI EMU ETF (HEZU). As of March 30, 2015, the majority (53.3%) of HEWG is invested in the consumer discretionary, financials and health care sectors, which can provide investors exposure to the potential U.S. demand for German goods and services*. HEZU offers broader eurozone exposure.
And if you want to more actively shape your view on the currency, you can pair these hedged funds with our unhedged versions: iShares MSCI Germany ETF (EWG) and iShares MSCI EMU ETF (EZU).
To learn more about the eurozone’s economic outlook, read the recent BlackRock Market Perspectives and a white paper I’ve written with my colleague, Chief Investment Strategist Russ Koesterich.
Heidi Richardson is a Global Investment Strategist at BlackRock, working with Chief Investment Strategist Russ Koesterich. She is also the lead investment strategist for iThinking. You can find more of her posts here.