Investors in traditional international funds are waking up to the realization that currencies play a vital role in generating returns. The majority of funds that track both developed and emerging markets use a U.S.-dollar denominated structure that faces an uphill battle during periods of prolonged dollar strength.
Dodd Kittsley, head of ETF strategy at Deutsche Asset & Wealth Management, recently wrote a new market outlook report that underscored the headwind a rising U.S. dollar creates for these assets. He pointed out that in 2014 the MSCI EAFE Index returned 5.9 percent in local currency terms, but –4.9 percent in U.S. dollar terms, a difference of 10.8 percentage points.
One reason for this breakneck pace of PowerShares ...
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