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Investors Piling In To Currency-Hedged ETFs

TedTed
in Fund Discussions
FYI: Investors are hedging their bets against more wild currency moves.

Nearly half of all inflows into U.S.-listed exchange-traded funds this year have been invested in currency-hedged products, according to ETF.com. A total of $10 billion has entered 35 currency-hedged funds in 2015, amounting to 49% of the $20.4 billion that all ETFs had gathered as of Friday, the firm said.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2015/02/17/investors-piling-in-to-currency-hedged-etfs/tab/print/

Comments

  • BobCBobC
    If that is not a red flag, I don't know what is. Herd mentality at its worst.
  • scott
    BobC said:

    If that is not a red flag, I don't know what is. Herd mentality at its worst.

    "amounting to 49% of the $20.4 billion that all ETFs had gathered as of Friday, the firm said."

    Wow. Yeah, I'll agree with BobC on this. When the tide turns...yikes.
  • ron
    I think a lot of investors are missing the boat by not investing with Hasenstab in Templeton Global Bond Fund. He is also very good with currencies in the long term. I own TGBAX.
  • LLJB
    The trade has been crowded for a while, but that $20 billion is not betting against just one currency. Probably most of it is betting against the EUR and Yen, but there are other currencies people would hedge against the strong dollar. IMO the Euro and Yen are not getting stronger anytime soon. It may be years that the dollar trends stronger and as long as it doesn't weaken then hedged investments will perform the same or better than un-hedged alternatives.

    When it does change then it might get ugly, but I don't think that will be soon and the beauty of ETFs is that shutting down positions and knowing where and how big your bets are is a lot easier than with mutual funds.
  • heezsafe
    Well, Edward S., in his monthly commentary contribution, did warn us that a bad moon was arising on this.
  • kevindowkevindow
    As long as the ECB and BOJ are in QE mode, their currencies should continue decline relative to the USD, so I think currency hedging makes sense right now, but I closely follow currency trends. Even a favorite on this forum, FMIJX, has $250M dedicated to hedging currencies. Right here, right now, I think the herd is right.

    Kevin
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