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Hedged and non hedged European funds

prinx
in Fund Discussions
I traded VGK for the hedged HEDJ in November and have been rewarded for doing so as the Euro became more devalued as compared to the dollar. Although the European market closed down today the EURO continued to rise.
It would seem that somewhere along the way HEDJ will reflect the rising EURO and I may want to return all or a portion to VGK.

Because the Euro-Dollar is unpredictable and depends on the US interest rates, Greece financial improvement, ECB quantitative easing etc., I am thinking of diversifying my European funds in 50% VGK and 50% HEDJ.
Would appreciate other opinions on their approach to European funds with regard to current situations.
prinx

Comments

  • JoJo26
    I think a 50/50 split makes a lot of sense. I think so for a couple of reasons:
    1) The USD has probably made a good portion of its move already so from a tactical perspective, it makes sense to take some of this bet off the table.
    2) Longer-term, I like the 50/50 split because it removes (at least most of) the emotion when it comes to what will happen in the shorter-term. If USD continues to rise, you won't have to go back and think "man, I wish I had hedged" because you did (50% of it) and vice versa.
  • LLJB
    While it's clear the dollar has lost some of its steam recently I believe the longer term trend for a stronger dollar will continue and HEDJ, which I also own, will be a better way to play Europe than an un-hedged fund. I do have several global or international mutual funds with some exposure to Europe that's not hedged and I'm living with that because I like the funds but everything I've added to Europe since last fall has been in HEDJ and it will continue to be that way until the ECB suggests it will start to reduce it's easy monetary policy.
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