With the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEArca: DBJP) up almost 20% this year, DBAW’s Japan exposure has helped drive the all-world ETF to a 9.2% gain. Meanwhile, DBAW’s unhedged counterpart is up 6.9%. [Expect Prolonged Dollar Strength]
The Japanese economy is growing more quickly than expected, bolstering the appeal of Japan country-specific exchange traded funds. Japan’s economy expanded an faster-than-expected annualized 2.4% compared to the previous quarter, reports CNBC. The economy grew 0.6% in the first quarter over the last three months of 2014.
Unlike other non-hedged international ETFs, DBAW’s underlying index is designed to diminish exposure to fluctuations between the value of the U.S. dollar and those of non-U.S. countries. However, potential investors should be aware that a currency-hedged ETF may underperform a non-hedged ETF if the local currencies begin appreciating, or the U.S. dollar weakens.
Deutsche X-trackers MSCI All World ex US Hedged Equity ETF
