2 Hedged Europe ETFs to buy after ECB action
Last week, the ECB announced another rate cut and a program to purchase asset backed securities and covered bank bonds. These moves will remove some fears regarding the deflationary threat in the region and encourage bank lending. With the Fed tapering its QE and the ECB continuing on its easing path and possibly starting a full-fledged QE sometime in future, money is likely to flow into European equities.
Further, after the bull run of more than five years, valuations of most US stocks look somewhat stretched. On the other hand, European stocks began to recover only last year after many years of pessimism and are still significantly below their pre-crisis high and have some way to go.
An important factor to consider in international investments is the foreign currency movement. US dollar has quite strong of late, compared to other major currencies like the Euro, British pound and the Japanese yen. This week, the dollar touched a 14 month high against a basket of major currencies. One of the main reasons for the dollar’s resurgence is the expected divergence in the monetary policy here in the US and in other developed economies.
Further, even in the longer term, it is difficult to predict currency moves and investors who want a simple exposure to European stocks without currency related volatility should consider hedged ETFs.
In the current scenario investors should take a look at these two hedged ETFs that provide exposure to European stocks while removing the exposure to the currencies.
Read the analyst report on HEDJ
Read the analyst report on DBEU
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