Hedging Currency Volatility Considered At Morningstar ETF Conference

With interest rates near zero, hedging currency risk in the developed world is nearly cost free, a panel discussion at the Morningstar ETF Conference in Chicago addressed variable issues in using a currency hedged ETF for investing in foreign securities. Panelists noted a currency hedge is generally neutral in terms of absolute returns with the primary benefit coming in a reduction of volatility. While the U.S. dollar has been exhibiting significant strength, there are economic factors that could derail this trend, which could introduce an additional level of market volatility to an already volatile market environment.

Morningstar: Currency hedging in light of a continued trend in the U.S. dollar

As the...