Episode summary
Currency Hedging & Navigating Global Markets Through ETFs
ETF Prime
· · Hosts: Nate Geraci, Simeon Hyman · Guests: Maria Rahni, Sandra Testani
Summary
The first half focused on a large international equity ETF with a 50% currency hedge and why the host thinks it has become a timely core holding. The guest argued that the structure is meant to reduce volatility without making a full bet on the U.S. dollar or foreign currencies, using monthly-reset currency forwards across 14 currencies. She said the half-hedge can soften downside when the dollar weakens while still allowing some participation if the dollar strengthens.
The guest also said the U.S. dollar remains hard to call, with geopolitical risk supporting safe-haven demand at times, but longer-term currency moves can add or subtract roughly 5% to 6% from international returns. She framed international outperformance as driven by themes in Europe and Japan, including defense and infrastructure spending, stronger bank lending, and corporate reform. The host emphasized that many U.S. investors remain underweight international assets because of years of U.S. outperformance and home bias.
The second half turned to the broader American Century ETF lineup and market positioning. The guest said the firm has leaned into active ETFs across equity, fixed income, and alternatives, with investors currently focused on diversification in equities and uncertainty in bonds. In U.S. stocks, she highlighted concentration risk and suggested more diversified growth exposure; in fixed income, she said short duration and active credit selection are drawing interest as rates, duration, and spreads remain unsettled.
Key takeaways
- The guest said a 50% currency hedge is designed to lower volatility without forcing a full dollar call.
- The guest argued international stocks still deserve attention because European and Japanese themes are supporting earnings and sentiment.
- The guest said many U.S. investors remain structurally underweight international equities despite broader global market opportunity.
- The guest said concentration in U.S. large-cap growth is pushing interest toward more diversified growth strategies.
- The guest said short-duration and actively managed fixed income remain attractive because rate and credit risks are still hard to navigate.
Notable quotes
“We like to call it the hedge of least regret”
“It allows an investor to kind of split that difference and not make the currency call, but still mitigate some of that currency risk”
“the dollar is a key safe haven asset”
“the US is over 60% of global market cap”
“the fact that 10 stocks represent 40% of the S&P 500 index”
How the episode opens
We like to call it the hedge of least regret. All right, joining me will be Maria Ronnie, senior director, equities product manager at New York Life Investments, who currently offers 21 ETFs, over $8 billion in assets. And I'll tell you, sometimes an ETF just catches my attention for whatever reason.
It could be flows, uh, performance, the strategy itself. There are a number of reasons. And as I was looking at the New York Life lineup, I noticed the most popular ETF by assets is the Footsie International Equity Currency Neutral ETF, ticker HFXI, which just has over $2 billion invested in it.
It's taken in nearly $800 million just this year. So, that certainly caught my attention. And then if you look at performance, it's actually outperformed a number of the largest developed international ETFs in large part because it does have this uh currency hedging component.
And if you think about that, with all of the headlines around the strength of the US dollar or lack thereof, uh there's a lot of debate uh around that right now. And so I would say the bottom line is this ETF checks a lot of boxes of intrigue for me. And so Maria and I are going to dive fairly deeply into this ETF.
I would say particularly around that currency hedging component and then along with that we'll have a conversation around the current state of international stocks overall uh which of course have been outperforming for a while now going back to the beginning of last year. So we'll discuss some uh key considerations for investors. Now later I'll be joined by Sandra Tastani, head of global ETF product and strategy at American Century who they continue to move up the ETF leaderboard.
Currently 49 ETFs in all about $ 160 billion in assets.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- currency hedging
- u.s. dollar
- international equities
- etf product strategy
- global markets
Companies and tickers mentioned
- New York Life Investment Management
- American Century
Watch the episode
Watch “Currency Hedging & Navigating Global Markets Through ETFs” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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ETF Prime, this episode and its artwork belong to Nate Geraci. Octagon is not affiliated with the show; this page is an independent summary.
