With the ECB engaging in loose monetary policies and quantitative easing, the euro currency could continue to depreciate against U.S. dollar. Consequently, investors could take a look at euro-hedged options that diminish currency risks.
“Consider currency hedged exposure, given continued strength in the U.S. dollar could erode returns in foreign markets (such as Europe) for dollar-based investors,” BlackRock said.
For example, investors interested in Europe but are concerned about a depreciating euro currency can take a look at euro-currency hedged iShares Currency Hedged MSCI EMU ETF (NYSEArca: HEZU), which tracks EZU except it includes forward contracts to hedge against a weaker euro. Alternatively, investors can also look at other options, including the WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) and Deutsche X-trackers MSCI EMU Hedged Equity ETF (NYSEArca: DBEZ).
The Greece bailout drama, though, remains a near-term risk. However, BlackRock argues that the small country should not taint the overall investment case the Eurozone. [Now This: Greece ETF Contends With S&P Bank Downgrades]
For more information on the Eurozone, visit our Europe category.
Max Chen contributed to this article.