Investors may want to consider hedging their exposure to emerging markets, according to an exchange-traded fund expert.
Ben Slavin, global ETF head and managing director at BNY, said that while there have been significant inflows into Indian, European and Japanese ETFs, investors should consider the strength of the US dollar.
“You have to look at the impact of the dollar on those returns depending on whether you want to be hedged or not hedged, because it’s a very important factor in how things are going to play out in the future,” Slavin told Monday CNBC’s “ETF Edge.”
One area he pointed out is the level between the US dollar and the Japanese yen.
The iShares MSCI Japan ETF (EWJ) offers investors access to Japanese stocks, but does not take into account the fluctuations between the Japanese yen and the US dollar. It has grown less than four percent this year.
The WisdomTree Japan Hedged Equity Fund (DXJ)which measures exposure and takes fluctuations into account, has grown by more than 20% over the same period.
“It is very important to make the allocation decision, especially when it comes to your views on the dollar. And ETFs give investors these different options to allocate one way or another,” Slavin said.
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2024-06-20 20:50:38
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