“It’s appropriate – and I’ve said this in the past – for the Fed to gradually and cautiously increase our overnight interest rate over time,” Yellen said Friday. “Probably in the coming months such a move would be appropriate.”
If the Fed hikes rates, the exchange value of the U.S. dollar will strengthen, or foreign currencies will depreciate relative to the greenback. Consequently, a non-hedged international investment will experience lower U.S. dollar-denominated returns.
Investors can capture European market returns while hedging against the foreign exchange risks through a number of hedged-equity ETFs.
Europe currency-hedged equity ETFs:
- WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ)
- Deutsche X-Trackers MSCI Europe Hedged Equity ETF (NYSEArca: DBEU)
- iShares Currency Hedged MSCI EMU ETF (NYSEArca: HEZU)
- PowerShares Europe Currency Hedged Low Volatility Portfolio (NYSEArca: FXEU)
- WisdomTree Europe Hedged SmallCap Equity Fund (NYSEArca: EUSC)
- Deutsche X-trackers MSCI EMU Hedged Equity ETF (NYSEArca: DBEZ)
- IQ 50 Percent Hedged FTSE Europe ETF (NYSEArca: HFXE)
- First Trust RiverFront Dynamic Europe ETF (NasdaqGM: RFEU)
- JPMorgan Diversified Return Europe Currency Hedged Equity ETF (NYSEArca: JPEH)
- SPDR EURO STOXX 50 Currency Hedged ETF (NYSEArca: HFEZ)
- ProShares Hedged FTSE Europe ETF (NYSEArca: HGEU)
- O’Shares FTSE Europe Quality Dividend Hedged ETF (NYSEArca: OEUH)
- WisdomTree Dynamic Currency Hedged Europe Equity Fund (BATS: DDEZ)
- iShares Edge MSCI Min Vol Europe Currency Hedged ETF (BATS: HEUV)
- Deutsche X-trackers MSCI Eurozone High Dividend Yield Hedged Equity ETF (NYSEArca: HDEZ)
- iShares Adaptive Currency Hedged MSCI Eurozone ETF (BATS: DEZU)
For more information on hedged options, visit our currency hedged ETFs category.