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BMO MSCI Europe High Quality Hedged to CAD Index ETF (ZEQ)
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Global X Europe 50 Index Corporate Class ETF (HXX)
Q: As a follow up to my question on international ETFs in CAD, you pointed out ZEQ. Two questions: 1. In a comparison between ZEQ and HXX, the former is CAD-hedged, but not the latter. On performance, HXX has outperformed. Please advise your advice on currency risk, and if willing to accept the Euro risk, which you would prefer and why. 2. HXS and XIU and tax efficiency - if your preference is for XIU, please explain pros and cons and why XIU. I note in 2022, XIU outperformed.
5i Research Answer:
We like having some FX exposure in a protfolio. We tend to prefer USD as it has more of a safe haven aspect to it but are not 'against' other currencies. Of course, currency moves are at best hard to predict so we think the decision is more a portfolio and diversification decision opposed to one about specifically generating a return from the currency. For the added diversification and the total return aspect, we might side with HXX. For similar reasons, we might side with HXS but note that HXS and XIU are different markets.