Rounds of speculation over the Fed lift-off resumed in full volume to start November as the central bank brought back the December rate hike possibility on the table in its October-end meeting. Not only this, in early November, the Fed chair indicated that the U.S. economy is ‘performing well’ and a slower rate hike trajectory would be justified in the December meeting if the economy maintains the momentum.

While this single statement was enough to fuel the greenback against a basket of foreign currencies, a barrage of policy easing across the globe, be it developed or emerging, made the U.S. dollar even stronger. In fact, persistently weak oil prices put a break on global inflation which in turn called for more easing.

To add to this, strong U.S. October job report, wherein nonfarm payrolls increase marked the highest advance in 10 months and the unemployment dropped to the lowest level in seven and a half years, buoyed up the December rate hike possibility further. All these took the dollar index to a seven-month high on November 9.

Global Policy Easing on Full Swing 
 
Most importantly, the European Central Bank (ECB) president Mario Draghi recently reassured of a more intensified and protracted QE measure (if needed). He reaffirmed the evaluation of the monetary policy by the end of this year based on a volley of economic data. As of now, €1.14 trillion ($1.16 trillion) worth of QE measure is in place in the Euro zone, which is to be pursued till September 2016.
 
With an exasperating weakness in Euro zone’s near-term growth prospects and deflationary woes peeking in, investors can reasonably expect a beefed-up policy measure pretty soon. Sensing the possibility, CurrencyShares Euro ETF (FXE) lost about 5.4% in the last one month (as of November 9, 2015).
 
Next comes Bank of Japan (BoJ), which is walking along the same lines. Having failed to perk up the ailing economy, BoJ is also speculated to enhance its fiscal stimulus, going by the source. Notably, in October 2014, the bank raised its asset buying program to 80 trillion yen a year from the initial rate of 60–70 trillion yen. CurrencyShares Japanese Yen ETF (FXY) was also down about 2.6% in the last one month.
 
Other developed economies are also taking the same stance. In fact, Bank of England cut the UK growth forecast for this year and the next and simultaneously cast out the possibility of a rate hike soon. UK’s inflation now hovers around the near-zero level.
 
China, the second-largest economy in the world, slashed its key interest rates six times since last November, devalued the currency by 2% and rolled out plenty of petite easing measures to boost domestic consumption this year. Chinese currency Renminbi lost about 3.3% against the greenback so far this year.
 
Apart from these global superpowers, several other countries like Turkey, India and South Korea are opting for policy easing. Even Russia is also mulling over a rate cut once the high inflation rate cools off.

In a nutshell, with IMF cutting its global growth forecast for this year to 3.1% (in October) from the July projection of 3.3% and the April projection of 3.5%. As a result, the rate cut cycle will play a crucial role in the coming days and so will currency depreciation of the concerned countries against the greenback as the U.S. is to see policy tightening in almost a decade.

 
How to Play?

While monetary easing makes these countries a compelling investment proposition for U.S. investors, a sliding currency hurts total returns, at least when repatriating back to dollars. For this reason, investors might want to consider a hedged currency play if they want to stay exposed to the gradual pickup in the global growth story, but don’t want to be dragged down by adverse currency translation.

Below, we have profiled four international ETFs for those who are looking for hedged exposure at this time (read: Flurry of New Currency Hedged ETFs Fuels Price War).

db X-trackers MSCI South Korea Hedged Equity Fund (DBKO)

The fund tracks the MSCI Korea 25/50 US Dollar Hedged Index, managing an asset base of $123.3 million. Samsung takes the top spot with 21.6% allocation, followed by Hyundai Motor and SK Hynix with about 4% and 3% allocation, respectively. DBKO trades in moderate volumes of 330,000 shares and charges 58 basis points as fees.

Top component Samsung’s stellar earnings beat and surged 80% in the September quarter, leading the fund to add about 3.3% in the last one month (as of November 9, 2015). DBKO currently has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

iShares Currency Hedged MSCI Germany (HEWG)

Since Germany is one of the major growth engines of the Euro zone, this ETF merits a look. The fund has an asset base of $1.57 billion and trades with volumes of 1.2 million shares a day on average. HEWG charges 53 basis points as expenses. The fund tracks the MSCI Germany Index to provide exposure to 54 German equities while mitigating exposure to fluctuations between the value of the euro and the U.S. dollar (read: 3 Excellent ETFs to Play the Dollar Surge).
 
Large caps dominate the fund with 81% exposure, followed by 15% allocation to mid caps while small caps take the rest. Also, the fund spreads out its assets well across various sectors with Consumer Cyclical, Financials and Health Care taking the top three spots. The fund has a Zacks ETF Rank #2 with a Medium risk outlook. The fund advanced 8.2% in the last one month.

WisdomTree Europe Hedged Equity Index Fund (HEDJ)

With talks about further easing, hedged European ETFs were deserving winners in the recent sessions. The $20.7 billion-fund charges 58 bps in fees. Holding about 128 securities in its basket, the product is pretty well spread out across components with no firm making up for more than 5.79% of assets. Consumer Staples, Industrial, Consumer Discretionary, Health Care and Financials have double-digit weight in the fund (read: 3 European ETFs Rebounding Sharply).

In terms of country allocation, Germany and France are leading with about 25.4% and 25% share, respectively, followed by the Netherlands (17.1%) and Spain (17%). The Zacks Rank #3 fund was up over 7.6% in the last one month.
 
WisdomTree Japan Hedged Equity Fund (DXJ) 
 
DXJ looks to offer investors a way to gain exposure to the Japanese shares devoid of currency risks. This is a liquid choice in the space with 7,000,000 shares in average trading volume a day. The large-cap oriented fund has a huge asset base of $16.7 billion and charges 48 bps in fees (see DXJ vs. DBJP: Which is the Better Hedged Japan ETF?).

Toyota Motor (4.88%), Mitsubishi (4.58%) and Japan Tobacco (4.18%) take the top three spots of the fund while consumer discretionary (24.9%) and industrials (23.3%) are top two sectors. The fund was up 6% in the last one month and has a Zacks ETF Rank #2 with a Medium risk outlook.