#currency-hedging

#currency-hedging

BNDX tracks the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged), holding thousands of government and corporate bonds from developed markets across Europe, Asia, and beyond, with a small emerging market component. Currency hedging is applied systematically, so returns reflect bond performance only, not swings in the euro or yen.

For investors wishing to mitigate currency fluctuation risk for European market investments, xTrackers MSCI Europe Hedged Equity ETF (NYSE: DBEU) is one of a small few that fit the bill, yet still outpaces the Vanguard' S&P 500 ETF (NYSE: VOO) and State Street's S&P 500 ETF (NYSE: SPY). Currency hedging is a nonexistent issue for US focused funds, since more than 99% of the time, all of the securities are entirely denominated in US dollars.

Investors are selling the dollar in part because of President Trump's attacks on the Fed. If the Fed stops being independent of political meddling, then its credibility as a source of sound monetary policy will become compromised, analysts have repeatedly warned. That will make the dollar a less reliable reserve currency-and it is already leading investors to hedge against U.S. assets, according to Deutsche Bank.