Currency Hedging in International ETFs: 5-Year Performance, Volatility
Core TakeawaysHedging Effect: During periods of US dollar strength, currency-hedged ETFs protect returns; during dollar weakness, they sacrifice gains — 2021–2023 USD strength favored unhedged international positionsVolatility Reduction: Hedged international ETFs typically exhibit 15–20% lower volatility than unhedged peers, eliminating currency fluctuation noiseCost Friction: Annual hedging premium ranges 0....