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I will disagree but welcome arguments why I am wrong. It seems to me that historically most currency fluctuations were too arcane to be understood or acted upon by the average investor but currently we have at least two currencies (yen and euro ) where it is quite clear the officials want to see a weakened currency. Should'nt we therefore hedge in accordance with an analogy to the Zweig rule" Don't fight the fed
We investors know there are "days in the sun" for every investment; above other investment choices. We also understand that the "days in the sun" run their own paths and lengths based upon any number of factors.
These price trends in either direction have their own shelf-life.
For too many years beyond what I expected, the Euro/US currency ratio remained at $1.25 range average. I wondered why many times; but it was the fact and the reason was beyond my ability to define. This circumstance began to change in the past several months. The Euro now only costs about $1.08 U.S. I expect further value loss in the Euro v. the U.S. dollar; in order to "help" with Euroland exports.
Relative to this, the below Euro-area indexes/etfs reflect price action YTD. One may conclude their own opinion as to whether a "hedged currency" position is/was valid, so far..... Several country funds have been included in this list as other reference points.
HEDJ Wisdomtree International Hedged Equity Fund +17.01% VGK Vanguard FTSE Europe ETF +3.84% EZU iShares MSCI EMU Index Fund +4.60% EWG iShares MSCI Germany Index Fund +5.95% FEZ SPDR DJ EURO STOXX 50 ETF +3.58% EWU iShares MSCI UK Index Fund +2.83% IEV iShares S&P Europe 350 Index Fund +3.79% DBEU Deutsche X-trackers MSCI Europe Hedged Equity ETF +10.83% EWP iShares MSCI Spain Index Fund -3.21% EWL iShares MSCI Switzerland Index Fund +3.16% HEWG iShares Currency Hedged MSCI Germany ETF +17.17% FEEU FI Enhanced Europe 50 ETN +5.09% EWI iShares MSCI Italy Index Fund +5.59% DFE WisdomTree Europe SmallCap Dividend Fund +7.34% IEUR iShares Core MSCI Europe ETF +3.84% HEZU Currency Hedged MSCI EMU ETF +15.40% EWD iShares MSCI Sweden Index Fund +5.75% EWQ iShares MSCI France Index Fund +4.71% FEP First Trust Europe AlphaDEX Fund +5.21% FEU SPDR DJ STOXX 50 ETF +3.36%
Lastly, is this finally Europe's "day in the sun" for investment returns? Note: we're invested in HEDJ and plan to add as circumstances dictate.
Generally, "limits fluctuations" would be considered a good thing in investing (else why would anyone look at something like the Sharpe Ratio?), but the author of the article dismisses it quite cavalierly. I guess he can argue the point with FMI and Tweedy, Browne. For my part, I don't believe I've ever heard any arguments as to why the relative values of different currencies are expected to return to some mean. Are there any other than statistical histories which show that, e.g., the Euro and Dollar have done so over some previous time period? That sort of study is so open to data mining that my inclination would be to dismiss it out of hand. Anyway, I believe the argument for hedging is that you're buying these companies in order to share in their profits, not to speculate in currency movements. Hedging certainly has its costs, but lowered volatility has its benefits as well.
@jerry I was writing when you posted; but it is obvious that I am in agreement with you, on this point, at this time. @Ted Thank you for your link post regarding hedging currency with global investments.
Note: as is generally known here; be aware of thin daily volume, premiums and/or bid-ask spreads, are options available on the eft/index and related with some of these choices.
Comments
We investors know there are "days in the sun" for every investment; above other investment choices. We also understand that the "days in the sun" run their own paths and lengths based upon any number of factors.
These price trends in either direction have their own shelf-life.
For too many years beyond what I expected, the Euro/US currency ratio remained at $1.25 range average. I wondered why many times; but it was the fact and the reason was beyond my ability to define.
This circumstance began to change in the past several months. The Euro now only costs about $1.08 U.S. I expect further value loss in the Euro v. the U.S. dollar; in order to "help" with Euroland exports.
Relative to this, the below Euro-area indexes/etfs reflect price action YTD.
One may conclude their own opinion as to whether a "hedged currency" position is/was valid, so far.....
Several country funds have been included in this list as other reference points.
HEDJ Wisdomtree International Hedged Equity Fund +17.01%
VGK Vanguard FTSE Europe ETF +3.84%
EZU iShares MSCI EMU Index Fund +4.60%
EWG iShares MSCI Germany Index Fund +5.95%
FEZ SPDR DJ EURO STOXX 50 ETF +3.58%
EWU iShares MSCI UK Index Fund +2.83%
IEV iShares S&P Europe 350 Index Fund +3.79%
DBEU Deutsche X-trackers MSCI Europe Hedged Equity ETF +10.83%
EWP iShares MSCI Spain Index Fund -3.21%
EWL iShares MSCI Switzerland Index Fund +3.16%
HEWG iShares Currency Hedged MSCI Germany ETF +17.17%
FEEU FI Enhanced Europe 50 ETN +5.09%
EWI iShares MSCI Italy Index Fund +5.59%
DFE WisdomTree Europe SmallCap Dividend Fund +7.34%
IEUR iShares Core MSCI Europe ETF +3.84%
HEZU Currency Hedged MSCI EMU ETF +15.40%
EWD iShares MSCI Sweden Index Fund +5.75%
EWQ iShares MSCI France Index Fund +4.71%
FEP First Trust Europe AlphaDEX Fund +5.21%
FEU SPDR DJ STOXX 50 ETF +3.36%
Lastly, is this finally Europe's "day in the sun" for investment returns? Note: we're invested in HEDJ and plan to add as circumstances dictate.
Regards,
Catch
Regards,
Ted
Here's Why Investors Should Count on Currency Hedged ETFs: Video Presentation:
http://www.thestreet.com/video/13068995/heres-why-investors-should-count-on-currency-hedged-etfs.html
I was writing when you posted; but it is obvious that I am in agreement with you, on this point, at this time.
@Ted
Thank you for your link post regarding hedging currency with global investments.
Currency hedged etf list, most included
Note: as is generally known here; be aware of thin daily volume, premiums and/or bid-ask spreads, are options available on the eft/index and related with some of these choices.