‘Hedge America’ Threatens $1 Trillion Drag on the Sinking Dollar

The real mantra from global investors is more like “Hedge America” — that is, keep snapping up US stocks and bonds but do so while buying derivatives that protect those investments against any further declines in the dollar. Starting around mid-year, and for the first time this decade, flows into dollar-hedged exchange-traded funds that buy US assets have outpaced those into unhedged funds, according to Deutsche Bank AG, which said the shift occurred at an unprecedented clip. What it boils down to is that the notion of the exceptionalism of American markets, which seemed in jeopardy after President Donald Trump unveiled punishing global tariffs in April, is alive “with a twist” — avoiding exposure to the greenback, said Laura Cooper, a global investment strategist at Nuveen in London.