Investors are increasingly diversifying away from a U.S.-centric portfolio, allocating toward international markets to diversify exposure and potentially enhance returns. Nevertheless, foreign markets come with their own set of idiosyncratic risks that advisors need to be prepared to tackle.
On March 14, 2018, ETF Trends will be hosting its annual Virtual Summit, an online virtual conference environment where financial advisors can learn about current ETF issues, hear from industry experts and connect with peers without the burden of cost and traveling.
On the panel titled, Understanding Modern Day Risks and Opportunities with International Markets, Rob Bush, Director and ETF Strategist for Deutsche Asset Management, Josh Rogers, Vice President and Beta Specialist for J.P. Morgan Asset Management, and Danton Goei, Portfolio Manager for Davis Advisors, will look to potential global investments today and ways to diminish risks when trying to access these pockets of opportunities.
For instance, when gaining exposure to international equities, investors will be exposed to foreign exchange fluctuations or currency risks. A rebounding dollar or weakening overseas currencies are likely to help currency hedged exchange traded funds, such as the Xtrackers MSCI EAFE Hedged Equity ETF (NYSEArca: DBEF). As the U.S. dollar strengthens, foreign currencies would depreciate. If an investor holds a foreign stock that is denominated in the local currencies, a weaker foreign currency would translate to a lower USD-denominated return on that foreign equity exposure.
DBEF provides exposure to equity securities in developed international stock markets, while at the same time mitigating exposure to fluctuations between the value of the U.S. dollar and non-U.S. currencies.
Additionally, something like the Xtrackers MSCI Emerging Markets Hedged Equity ETF (NYSEArca: DBEM) can provided a currency hedged way to access the emerging markets in case the U.S. dollar continues to strengthen.