iShares MSCI EMU USD Hedged UCITS ETF (Acc)
| Issuer: iShares |
| Asset Class: Equity |
| TER: 38bps |
| Trading Currency: USD |
| Pays Income: False |
| Listing Date: 03 Jul 2015 |
| Ticker: EMUU |
| ISIN: IE00BWZN1T31 |
This investment product offers targeted exposure to the equity markets of the European Monetary Union (EMU), specifically designed for investors whose primary currency is the US dollar. It aims to track the performance of an index composed of large and mid-capitalization companies from 10 developed Eurozone countries. The crucial feature of this fund is its currency-hedging strategy. It employs financial instruments, typically one-month forward currency contracts, to mitigate the impact of fluctuations between the euro and the US dollar on investment returns. This makes it a suitable option for those who want to invest in the underlying European assets without taking a view on the direction of the EUR/USD exchange rate.
The fund provides a way to participate in the economic performance of major European economies, such as Germany and France, while insulating the portfolio from potential currency headwinds. For a US dollar-based investor, a strengthening dollar (or weakening euro) would typically erode the returns from unhedged European equities. This product seeks to neutralize that specific risk, allowing the investment's performance to be driven primarily by the stock market performance of the constituent companies. As an accumulating share class, any dividends paid out by the underlying companies are automatically reinvested back into the fund, which promotes long-term capital growth through the power of compounding.
By investing in a diversified basket of securities across various sectors, the fund offers a broad and representative slice of the Eurozone's corporate landscape. It can serve as a core European equity allocation within a global portfolio for investors who prioritize stability and wish to reduce the volatility that often arises from foreign exchange movements. It is particularly well-suited for periods when an investor is bullish on European company fundamentals but anticipates a strong or appreciating US dollar.
