Should the U.S. dollar rebound from its recent doldrums, the Deutsche X-trackers MSCI EAFE Small Cap Hedged Equity ETF (CBOE: DBES) is an exchange traded fund to consider.

DBES “seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EAFE Small Cap U.S. Dollar Hedged Index. DBES offers investors purer access to small-cap developed market equities while mitigating exposure to fluctuations between the value of the U.S. dollar and select foreign currencies,” according to Deutsche Asset Management.

To its credit, DBES, a currency hedged ETF designed to exploit dollar strength against other currencies, turned in a solid performance last year even as the greenback was one of the worst-performing developed market currencies. Year-to-date, DBES is up 2.6%.

Small-caps are also focused on the domestic economy and have less direct exposure to global geopolitical uncertainty and currency risks, as opposed to large-cap companies that have an international footprint, which may be affected by overseas risks and a strengthening U.S. dollar. Still, it pays to look outside the U.S. for other small-cap opportunities.

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