The Currency-Hedged ETF Conundrum

A major theme of 2015 for ETF investors has been the volatility of emerging market currencies and a strengthening dollar. A dollar bull market can last 5-7 years and many exchange traded fund industry insiders believe that the proliferation of currency-hedging and related products in reaction to currency volatility may still be in its nascent stages.

WisdomTree has been at the forefront of currency-hedging in the ETF space, positioning them well for the surge in interest following a year of pared returns for investors who captured negative currency fluctuations within their exposures. If the strong dollar run continues as expected then ETF investors have some serious thinking to do regarding their global asset allocations moving forward.

The explosion of currency-hedged ETF products won’t make it easy on you. There is a wide swath of available currency-hedged ETFs that investors can use to remove the risk of fluctuations but Luciano Siracusano, Chief Investment Strategist at WisdomTree, recently talked to Tom about how the lens with which investors look at these allocations is just as important as the strategy itself.

Is currency a new asset class to be included in investor portfolios? Should all equities be hedged? Tom and Luciano dig into the details below.