NEW YORK (TheStreet) -- Amid unprecedented central bank stimulus, hedging against currency volatility is key, said Matt Hougan, CEO of ETF.com.

The exchange-traded fund of the year is the WisdomTree Europe Hedged Equity Fund  (HEDJ), he said. "That's an ETF that gives you exposure to Europe, but hedges out the currency risk. European stocks are going up, but the euro is getting slaughtered," he said. Eliminating the currency risk spawned a 12% return, compared to a traditional exchange traded fund exposed to Europe.

The euro has been devalued amid the European Central Bank's massive $1.2 trillion stimulus program, which began in March in an attempt to revive Europe's sluggish economy. Central bank stimulus is also flooding Japan's markets with liquidity, just like in Europe.

"It's the same story in Japan,' Hougan said, referring to the WisdomTree Japan Equity Fund  (DXJ) which tilts towards manufacturers and export firms, or the Deutsche X-trackers MSCI Japan Hedged Eq  (DBJP), which he said is more plain-vanilla. "Either way the yen is only going in one direction, which is lower and you want exposure to those Japanese equities, but you don't want that currency exposure," he said. Both exchange traded funds have returned over 20% since the start of the year.

Exchange traded funds are known for low fees. Roughly $12 billion flowed into exchange traded funds in the U.S. during May, ETF.com said. Growth has soared compared to 2014. Some $84 billion flowed into exchange traded funds from the start of 2015 through June 1, compared to $48.5 billion during the same period last year, the site said.

Hougan also said the financials sector saw significant inflows during May. The big banks are poised for higher profits as the Federal Reserve looks to hike interest rates, a move that will likely come at some point this year.

The Vanguard Financials ETF  (VFH) has returned over 3% for the year to date.

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