International allocations face many headwinds in 2022, including a strong U.S. dollar and rising geopolitical tensions. However, many investors are doubling down on their risk by investing in unhedged strategies.
In the upcoming webcast, What’s Your Strategy for International Allocations? Seeking Opportunities Against Geopolitical Risk and the Strong Dollar, Jeremy Schwartz, global chief investment officer at WisdomTree, and Liqian Ren, director of Modern Alpha at WisdomTree, will engage in a discussion on the benefits of currency hedging in international allocations to help access a “truer” exposure to foreign markets.
For example, the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and WisdomTree Europe Hedged Equity ETF (HEDJ) have been popular ways to play developed overseas markets while hedging against foreign exchange currency risks.
Specifically, the WisdomTree Japan Hedged Equity Fund seeks to provide exposure to the Japanese equity market while hedging exposure to fluctuations between the U.S. dollar and the yen.
The WisdomTree Europe Hedged Equity Fund seeks to provide exposure to the European equity market while hedging exposure to fluctuations between the U.S. dollar and the euro.
The underlying indices are designed to have higher returns than an equivalent non-currency hedged investment when the local currency is weakening relative to the U.S. dollar. Conversely, the underlying indices will have lower returns than an equivalent unhedged investment when the local currency is rising relative to the U.S. dollar.
Additionally, the WisdomTree Dynamic Currency Hedged International Equity Fund (CBOE: DDWM) is another strategy that investors can look to access a broader international market exposure.
The WisdomTree Dynamic Currency Hedged International Equity Fund seeks to track the performance of dividend-paying companies in the industrialized world outside of the U.S. and Canada while at the same time dynamically hedging exposure to fluctuations of the value of the applicable foreign currencies relative to the U.S. dollar. Specifically, the underlying index is comprised of companies incorporated in 15 developed European countries, Japan, Australia, Hong Kong, Israel, and Singapore.
In addition, DDWM is a more dynamic strategy where the underlying benchmark is designed to remove from the index performance the impact of changes to the value of foreign currencies relative to the U.S. dollar with a hedge ratio ranging from 0 to 100% every month.
Financial advisors who are interested in learning more about international investing strategies can register for the Tuesday, October 4 webcast here.
