Currency-Hedged ETFs and Why They Matter

Hedging is one of the best ways for an investor to protect their portfolio from currency risk, which is the risk of an investment losing value due to fluctuations in the foreign exchange market. This is especially the case today, when the U.S. dollar has risen significantly against international currencies. The strengthening U.S. dollar has had a pronounced negative impact on investing in other parts of the world outside of the United States. In response, many investors have hedged their portfolios against currency risk, and exchange-traded funds, or ETFs, do the same. This article will discuss why currency hedging matters, and highlight a few currency-hedged ETFs from which investors can choose.