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iShares, the exchange-traded fund business of investment giant BlackRock, has launched three new currency hedged ETFs designed to reduce the impact of currency fluctuations on returns when investing in foreign countries.
The new funds, which have been listed on the NYSE Arca and are linked to MSCI indices, are the iShares Currency Hedged MSCI EAFE ETF (HEFA), the iShares Currency Hedged MSCI Germany ETF (HEWG) and the iShares Currency Hedged MSCI Japan ETF (HEWJ).
The funds allow investors to access, in a single trade, international, German and Japanese equity market exposures, respectively, while reducing the risk of currency fluctuations, which can impact overall returns.
Each of the ETFs invests in their related unhedged, parent iShares ETF (tickers EFA, EWG and EWJ), thus benefiting from the deep liquidity of these established funds, whilst hedging out foreign currency exposure through the deployment of forward contracts.
The funds are managed by BlackRock’s Index Asset Allocation Team, which has over 50 years of combined experience and manages over $35 billion in currency-related assets. iShares has also managed currency hedged ETFs for over a decade, offering approximately 30 different funds internationally.
Daniel Gamba, Head of iShares Americas Institutional Business at BlackRock, commented: “Today’s volatile global currency rates are causing investors with international portfolios to pay closer attention to how they can manage currency fluctuations. iShares Currency Hedged ETFs offer an efficient and cost-effective solution in a single transaction, so investors don’t have to manage complex currency hedging strategies. Investors with positive views on Japanese, German or EAFE equities, but negative views on local currencies relative to the US dollar would be interested in these ETF funds.”
Diana Tidd, Managing Director and Head of the MSCI Index Business in the Americas, added: “With the growth of global investing, the impact of currency movements can be a significant issue. Investors are exposed to currency risk when investing abroad and adverse moves in exchange rates can impact their performance. Hedging currency exposure is one technique for taking currency risk out of the equation. For investors using our widely followed market capitalization indexes such as MSCI EAFE and MSCI Japan, the corresponding MSCI Currency Hedged Indexes enable them to directly analyze and measure the performance of a hedged equity index without the impact of currency but keeping the same underlying country and sector exposures. We are pleased that iShares is once again expanding their ETF suite based on MSCI indexes.”