Between WisdomTree and the db X-trackers, there are currency-hedged funds for Brazil and broad emerging markets and new funds covering Germany, the U.K. and small-cap Japan.
Of the funds with track records going back to at least the beginning of the year, the only other fund with a substantial performance gap was the db X-trackers MSCI EAFE Hedged Equity Fund (DBEF), which is up 8.4% year to date versus the currency-exposed iShares MSCI EAFE ETF (EFA), which is flat this year. The gap can be attributed to both funds having 22% of their equity exposure in Japan.
There is a downside to currency-hedged ETFs. Lately, the dollar has done well, but for much of the previous decade, the dollar declined against many currencies. Just as foreign equities will again outperform domestic, so too will the pendulum swing back and foreign currencies will outperform the U.S. dollar. When that happens the foreign-equity funds that aren't hedged should outperform.
At the time of publication the author held no positions in any of the stocks mentioned.Follow@randomroger This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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