Currency markets are often overlooked and misunderstood. But as central banks eye new rate changes and inflation proves less transitory than expected, investors would do well to carefully consider how currency exchange rates can impact their international equity allocations.
In the upcoming webcast, DWS’s Currency Forecast for 2022: Don’t Be Caught Off-Guard by Currency Fluctuations, DWS’ Jason Chen, senior research analyst, and Dr. Liang Ding, co-chief currency strategist, macro research, will discuss how international currency moves could affect global investments and portfolios in 2022, as well as how international currency-hedged strategies can enable investors to take a purer play on the underlying foreign markets.
For example, an all-world play that hedges against currency fluctuations against the U.S. dollar is the Xtrackers MSCI All World ex U.S. Hedged Equity ETF (DBAW). DBAW seeks investment results that correspond generally to the performance of the MSCI ACWI ex USA US Dollar Hedged Index, which is designed to track the performance of equity securities in developed and emerging stock markets while mitigating exposure to fluctuations between the value of the USD and the currencies of the countries included in the underlying index.
The Xtrackers MSCI EAFE Hedged Equity ETF (DBEF) seeks investment results that correspond generally to the performance of the MSCI EAFE US Dollar Hedged Index. The index is designed to track developed market performance while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the developed economies included in Europe, Australasia, and the Far East.
Emerging markets investors can also look to the same currency hedging strategy. In this case, it’s the Xtrackers MSCI Emerging Markets Hedged Equity ETF (DBEM). DBEM seeks investment results that correspond generally to the performance of the MSCI EM US Dollar Hedged Index. The fund, using a “passive” or indexing investment approach, seeks investment results that correspond generally to the performance, before fees and expenses, of the underlying index, which is designed to track emerging market performance while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the underlying index.
Financial advisors who are interested in learning more about international currency-hedged strategies can register for the Tuesday, February 1 webcast here.