Fitzsimmons: Why Euro Stocks Have More Room To Run

March 10, 2015 INSIGHT

iShares Currency Hedged MSCI Germany (HEWG | D-42)

Fitzsimmons specifically calls out Germany as leading the way for stabilization and outright growth in Europe. He also sees the euro continuing to slide against the dollar, which points directly to a currency-hedged option. ETF investors have no fewer than 3 euro-hedged German equity funds to choose from, of which iShares' HEWG is by far the largest and most liquid. HEWG's structure and approach is simplicity itself: The fund is literally a hedged version of the rock-solid iShares MSCI Germany fund (EWG | A-96), a "plain vanilla" German equity ETF. HEWG therefore differs from FX-hedged ETFs from WisdomTree, which typically screen for dividend payers and exporters.

WisdomTree Europe Hedged Equity (HEDJ | B-51)

Fitzsimmons previously stated that euro-hedged ETFs were enticing for 2015. Even after their stellar performance in recent months, he still thinks there's room for growth as the macro picture in Europe improves on the back of the ECB's historic QE program. HEDJ is currently the largest and most liquid Eurozone-focused, euro-hedged equity ETF. Besides neutralizing euro exposure, the dividend-weighted fund goes a step further, deliberately tilting its portfolio toward exporting companies that stand to benefit from a plunging euro—consumer-focused sectors get massive boosts in weighting. The popular fund has seen heavy inflows in 2015 and now has close to $13 billion in assets.

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