In 90% of the rolling 5-year periods since early 1973, currency exposure has added to volatility in the MSCI World Index, generating additional risk instead of diminishing risk through diversification.

For ETF investors, there are a number of options to capture international markets while hedging against a potential depreciation in foreign currencies. For instance, investors can hedge the currency risks and capture developed overseas market exposure with the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEArca: DBEF) and iShares Currency Hedged MSCI EAFE ETF (NYSEArca: HEFA). [ETFs to Access Stronger Overseas Developed Markets]

Euro-currency hedged ETFs can help diminish the negative effects of a stronger dollar or weaker euro currency on Eurozone market exposure. Euro-hedged ETF options include the Deutsche X-trackers MSCI EMU Hedged Equity ETF (NYSEArca: DBEZ), iShares Currency Hedged MSCI EMU ETF (NYSEArca: HEZU) and WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ).

Investors can also utilize currency-hedged ETF options to track a growing Japan with worrying about a depreciating yen, including the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ), iShares Currency Hedged MSCI Japan ETF (NYSEArca: HEWJ) and Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEArca: DBJP).

For more information on currency hedged strategies, visit our currency hedged ETFs category.

Max Chen contributed to this article.