Currencies And Their Affect On Your Stock ETFs
16 June 2011 at 9:21 am by Staff
The U.S. stock market has actually outperformed the overwhelming majority of world equity markets on a local currency basis. However, the dollar’s year-to-date slide has inflated the returns of developed world ETFs like iShares MSCI France (EWQ) and iShares Italy (EWI). In fact, virtually all of the gains for Foreign Stock ETFs traded on U.S. exchanges can be attributed to the dollar’s losses to major players like the euro, krona and Swiss franc.
Why does this matter? For one thing, if you believe that the U.S. dollar will continue losing ground to other world currencies, you might want to increase your foreign stock and Asian local debt exposure. On the other hand, if you think that the selling of the buck is overdone, or if you think that extreme fear will cause a rush back into the greenback, you might want to reduce investments that are affected by exchange rates.
Either way, it is important to be cognizant of ETFs that help you hedge against a falling dollar. It is also important to understand what does or does not affect your International Stock ETF holdings.
Major International Market Returns - Bespoke
ETFs for a Declining U.S. Dollar - Michael Rawson, Morningstar
How Vanguard Total Bond’s Low Tracking Error Is Achieved - David Ott, Seeking Alpha
VIX, Fear And Maintaining Intelligent Protection - SmartStops
ETFs Point to More Risk-Off Trade - John Spence, ETF Trends
Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFseasier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert disclosure details here.
Tags | Bond ETFs, ETF Investing, International ETFs, U.S. Dollar ETFs, Volatility Index
