ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Smart Beta Channel
  2. With the Fed’s Statement, Hedge Your Dollar with ‘DBEF’
Smart Beta Channel
Share

With the Fed's Statement, Hedge Your Dollar with 'DBEF'

Ben HernandezJan 28, 2021
2021-01-28

The Federal Reserve chose to keep rates in check yesterday. The U.S. dollar unexpectedly rose following the announcement, but it could be short-lived, warranting the case for a dollar hedging strategy through ETFs like the Xtrackers MSCI EAFE Hedged Equity ETF (DBEF B+).

“With the Federal Reserve holding its first monetary policy meeting of the year, it would be easy to attribute today’s U.S. dollar rally to the central bank’s comments,” writes Kathy Lien for Investing.com. “However, nothing in Fed Chairman Jerome Powell’s question-and-answer session warranted today’s spike in the dollar and losses in equities. A rally like the one we saw today in the greenback would normally be fueled by hawkish commentary.”

“Instead, the changes to the FOMC statement were slightly more dovish: The central bank acknowledged the moderation in activity and employment in areas hit the hardest by the pandemic and predicted modest inflation this year,” Lien added. “This cautious outlook explains why Powell thinks it’s ‘too early to focus on tapering dates.’ He said they are still a long way from meeting inflation and employment goals, so when it’s time to ‘gradually’ taper, they’ll let us know well in advance. By avoiding any specific time frame on taper, today’s comments should have driven the dollar lower, not higher.”

DBEF seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EAFE US Dollar Hedged Index. The fund, using a ‘passive’ or indexing investment approach, seeks investment results that correspond generally to the performance, before fees and expenses, of the underlying index, which is designed to track developed market performance while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the underlying index.

The fund is up 13% the past few months.

DBEF Price % Change

The Fed's Tepid Outlook

More dovishness could certainly add to the case for dollar hedging. As long as the economy continues to languish amid the pandemic, the dollar could see a pullback despite its recent strength.

“The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world,” the Fed said in its latest statement. “The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic.”

For more news and information, visit the Smart Beta Channel.


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X