After a Pause, Investors Return to Euro Hedged ETFs

After struggling through much of May and a good part of June, the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) is on the mend, surging 3.7% over the past month. That combined with a 4.5% slide by the CurrencyShares Euro Currency Trust (NYSEArca: FXE) over the same period is giving investors plenty of reasons to return euro hedged exchange traded funds.

Already among this year’s most prolific asset-gathering ETFs, the WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEArca: DBEF) are tacking on new investments at impressive clip this month. [Momentum for Currency Hedged ETFs]

“Traders are reviving bets on euro weakness as questions about the future of Greece in the common currency gives way to wagers on further divergence between monetary policy in Europe and the U.S. European Central Bank President Mario Draghi last week reiterated a commitment to providing unprecedented stimulus to the euro area through September 2016,” reports Rachel Evans for Bloomberg.

Since the start of July, investors have allocated nearly $600 million in new capital to HEDJ while DBEF has seen inflows of $206.4 million. DBEF, issued by Deutsche Asset & Wealth Management, is not a dedicated Europe ETF, but its exposure to European equities, both Eurozone and ex-Eurozone fare is, significant.

DBEF’s can hail from 21 countries, including the following: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. With combined weight to France and Germany of over 19%, DBEF is a credible hedged euro idea. [Big Growth for This Currency Hedged ETF]

Year-to-date, investors have added $14.8 billion to HEDJ and $10.9 billion to DBEF, far and away the best inflow totals among all ETFs. The $10.9 billion that has funneled into DBEF is more than double the $5.2 billion investors have allocated to the Vanguard Total Stock Market ETF (NYSEArca: VTI).