According to U.S. Treasury International Capital surveys, which cover a broader group of investments, over the year to January, U.S. holdings of Eurozone and Japanese stocks increased at the fastest rate in at least five years, rising by $1.124 trillion.
Currency-Hedged ETF Options
As the U.S. dollar strengthens and international currencies depreciate, international stock ETF investors may also turn to currency-hedged ETF options that have a built in method to hedge the currency risks through currency forward contracts.
For instance, the depreciating JPY has allowed currency-hedged Japan ETFs to outperform their non-hedged peers. For instance, 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) have been go-to options to access Japanese equities markets while hedging against foreign exchange risks.
Meanwhile, investors who believed the euro currency could weaken are bullish on the broader Eurozone can turn to ETFs like 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).
For more information on international markets, visit our global ETFs category.