Currency hedging is one of the key emerging trends in exchange-traded funds, one that has seen an explosion over the past year and can help provide clients with a new, flexible option to manage risk in their portfolio. While a small number of currency-hedged ETFs have been around for some time, the number of currency-hedged ETFs doubled in 2014. Their increasing popularity and importance is partly due to the economic environment and partly to the ongoing expansion of ETFs into new parts of the investment spectrum. To really maximize this sort of ETF, it is important to review the basics of currency hedging.

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