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ETF Prime: The International ETF Opportunity & Currency Hedging

BY | ETF Database
10:01 am ET 09/02/26 | 8 VIEWS
International equity ETFs and currency hedging strategies were the focus on this week’s ETF Prime. Host Nate Geraci welcomed Maria Rahni, senior director and equities product manager at New York Life Investments, followed by Sandra Testani, head of global ETF product and strategy at American Century.Key Takeaways: HFXI is up 54% since January 2025, outpacing the S&P 500’s 33% gain over the same period. The 50% hedge avoids making a full currency call while reducing portfolio volatility. High-net-worth investors average just 5% international exposure despite 35% global index weight. Rahni led with the IQ FTSE International Equity Currency Neutral ETF (HFXI B-), New York Life’s largest fund. It has drawn over $2 billion in assets and nearly $800 million in year-to-date inflows. The fund tracks developed international markets outside North America, hedging 50% of currency exposure across 14 currencies. Since January 2025, HFXI is up 54%, compared to 33% for the S&P 500. That partial hedge is what Rahni calls the “hedge of least regret.” A fully hedged fund bets on dollar strength, while an unhedged position bets on foreign currency appreciation. Splitting the difference avoids both calls and dampens portfolio volatility. Currently, with U.S. rates above international rates, the hedge is also generating positive carry. Rahni also flagged Germany’s defense and infrastructure spending as a catalyst for European private sector activity and resilient bank lending. Japanese corporate governance reforms, she added, serve as another key tailwind. She pointed to a structural home bias problem as well. The U.S. share of global market cap has grown from roughly 50% in 2014 to over 60% today, compounding the underweight of international in many U.S. portfolios.Active Strategies and the Diversification CaseTestani described the combined American Century and Avantis platform, spanning 49 ETFs and nearly $160 billion in assets, with roughly $40 billion in year-to-date inflows. The firm ranks as the fourth-largest active ETF issuer in the U.S. Avantis was built around low-cost, factor-driven strategies with particular strength in small cap, value, and international markets. See more: How International Equities ETF QINT Has Outperformed This Year Market concentration is shaping the diversification conversation, Testani noted. The top 10 stocks represent 40% of the S&P 500 and 60% of the Russell 1000 Growth Index. She also cited Bank of America research showing that high-net-worth investors allocate just 5% to foreign stocks, yet international equities represent 30% to 35% of global equity indexes. For fixed income, Testani pointed to elevated rate volatility as the defining theme. She favors shorter duration strategies that offer yields comparable to the Bloomberg AGG. Those strategies carry roughly half the duration risk, providing income without excess rate sensitivity.Listen to the Entire Episode of ETF PrimeFor more ETF Prime podcast episodes, visit our ETF Prime Content Hub.

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