Consequently, yield-seeking investors who are turning toward international markets may want to consider a currency-hedged strategy to limit the negative effects of weakening foreign currencies or a strengthening U.S. dollar on their investment. If a foreign currency weakens, a non-hedged foreign equity position would have a lower U.S. dollar-denominated return.
For example, the Deutsche X-trackers MSCI All World ex-US High Dividend Yield Hedged Equity ETF (NYSEArca:HDAW) is one such ETF. HDAW targets companies with higher-than-average dividend yields relative to their market-cap-weighted counterparts across both developed and emerging countries, excluding the U.S. Moreover, the ETF includes a currency hedge which helps negate the negative effects of weakening foreign currencies or a strengthening dollar on overseas returns. HDAW has a 2.46% 12-month yield.
For more focused exposure, the Deutsche X-trackers MSCI EAFE High Dividend Yield Hedged Equity ETF (NYSEArca:HDEF) tracks high dividend-yielding developed market stocks across Europe, Australasia and the Far East, and it hedges the currency risks as well. HDEF has a 2.68% 12-month yield.
Investors worried about continued devaluation in the euro currency but still want exposure to dividend-yielding stocks across the Eurozone may consider the Deutsche X-trackers MSCI Eurozone High Dividend Yield Hedged Equity ETF (NYSEArca:HDEZ). HDEZ has a 3.92% 12-month yield.
The Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (NYSEArca:HDEE) tracks high-yielding emerging market companies and also provides a currency-hedged option on its developing market exposure. HDEE has a 4.00% 12-month yield.