Investors in foreign stocks need to protect themselves with currency hedged ETFs as divergent central bank policies drive the dollar higher, said Daniel Gamba, Head of iShares Americas Institutional Business at BlackRock. Gamba added that quantitative easing programs in Europe and Japan have caused massive outperformance in the past year by the iShares Currency Hedged MSCI Germany (HEWG) and iShares Currency Hedged MSCI Japan (HEWJ), versus the iShares MSCI Germany (EWG) and iShares MSCI Japan (HEWJ) which are unhedged, yet hold the same underlying stocks. Gamba said the hedged ETFs are most often used for risk mitigation as opposed to an attempt to profit from currency swings.
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