An exchange-traded fund expert says investors may want to consider hedging emerging market risks.
Ben Slavin, global head of ETFs and managing director at Bank of New York, said that while there have been significant inflows into ETFs in India, Europe and Japan, investors should take into account the strength of the U.S. dollar.
“You have to think about the impact of the dollar on those returns, depending on whether you want to hedge or not hedge, because it’s a very important driver of how things pan out going forward,” Slevin told CNBC’s “ETF Edge” on Monday. .
One area he pointed to was the level between USD/JPY.
this iShares MSCI Japan ETF (EWJ) Provides investors with exposure to Japanese stocks but does not take into account fluctuations between the yen and the U.S. dollar. This year’s growth rate is less than four percent.
this WisdomTree Japan Hedge Equity Fund (DXJ)Exposures are given and volatility explained, with increases of over 20% over the same time frame.
“Making a decision on how to allocate is very important, especially when it comes to your view on the U.S. dollar. ETFs have different options for investors to allocate one way or another,” Slavin said.
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