Investment Capabilities

Currency-hedged ETFs Cost-effective tools for targeting the exposures you seek

State Street ETFs offer investors cost-effective¹, flexible, transparent tools for managing currency exposures across equity and fixed income allocations. Built through partnerships with investors and index providers and fueled by our institutional expertise, our currency-hedged share classes allow investors to target their exposures.

Why hedge currency exposure?

For international investors, currency movements can be a major driver of returns across asset classes. This is especially true in a low-return environment where currency swings can overwhelm the returns of the underlying asset. For example, between 13 January and 27 January 2025 (from peak to trough) the US dollar weakened significantly against both developed and emerging market currencies, the DXY index falling by close to 12.5%. In H1 2026, the USD rebounded overall but there have been a few periods during which it fell by over 3% in just two weeks (eg from mid to end January 2026).

Hedging selected currency exposures allows investors to focus on the return drivers that they want to own and reduce the number of variables affecting portfolio performance and its overall volatility.

Efficient ETF hedging tools

State Street ETFs are designed to allow investors to efficiently navigate between hedged and unhedged exposures.

Flexible

State Street ETF hedging options are built as separate share classes of the underlying fund. This makes it simple and cost-effective to switch between hedged and unhedged positions.

Cost effective

Premiums for hedged share classes of State Street ETFs range from 0 bps to 5 bps.

Transparent

Tracking a currency-hedged benchmark provides investors full visibility into the methodology, fees and past performance of the hedging strategy.

Built in partnership

When regulations required UCITS funds to operate hedged share classes within a hedged ratio of 95%-105% to the underlying NAV, other ETF providers stopped tracking hedged benchmarks. But at State Street, we worked with our index partners to create indices with transparent methodologies that would satisfy the new rules.

Backed by a currency leader

State Street ETFs are backed by State Street Investment Management’s more than 30 years of experience managing currency exposures for sophisticated institutional investors. We created one of the industry’s first dedicated currency management teams and continue to prioritise currency exposure as a major contributor to investment performance.

Solutions for any objective

State Street ETFs offer currency-hedged share classes in equity and fixed income exposures for USD, EUR, CHF, GBP and MXN. Investors may use these tools for a wide spectrum of targeted objectives.

Accessing US bond exposures in EUR

US bonds (treasury and corporate alike) may offer higher yield than those of other developed markets, but the USD fluctuations could impact returns. The suite of EUR-hedged treasury and corporate bond share class can protect against USD currency moves, and also offers a sustainable investing approach.

Benefiting from Euro AAA CLOs regular carry without currency volatility

For GBP and USD investors looking to benefit from the extra carry of Euro AAA CLOs while not incurring currency volatility.

Minimising US and global equity exposure to USD volatility

For investors looking to reduce their exposure to volatility in the USD market, we provide multiple ETFs which deliver the desired underlying global and US equity and fixed income exposures without the unintended USD currency risk. Depending on exposures, share classes are available in EUR, GBP and MXN hedged currencies

Accessing return drivers in emerging markets

Local currency premiums can be a major contributor to emerging market returns. By offering a share class that hedges only the base currency of the portfolio, we enable investors to accept the emerging market currency risk and their potential appreciation relative to the USD without also incurring USD cross risk.

Hedging global aggregate and global convertible bond exposures

State Street Investment Management is the only provider that offers a currency-hedged product tracking global convertible bond markets. This product, which includes securities denominated in various different currencies depending on issuance trends, showcases the expertise of our specialist managers and our skill at executing multi-currency hedges efficiently. Meanwhile the global aggregate index contains over 24 currencies across developed and emerging markets.

Our solutions

Whether you are looking to fully hedge all currency exposure or selectively target returns in specific currencies, State Street ETFs provide flexible, cost-effective solutions for executing your views with precision.

View Our Funds

Footnotes

Disclaimers

Marketing Communication
For institutional / professional investors use only.
Information classification: general access
Important risk information

Currency Risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

Currency Hedging involves taking offsetting positions intended to substantially offset currency losses on the hedged instrument. If the hedging position behaves differently than expected, the volatility of the strategy as a whole may increase and even exceed the volatility of the asset being hedged. There can be no assurance that the Fund’s hedging strategies will be effective.

Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.

Companies with large market capitalizations go in and out of favour based on market and economic conditions. Larger companies tend to be less volatile than companies with smaller market capitalizations. In exchange for this potentially lower risk, the value of the security may not rise as much as companies with smaller market capitalizations.

Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates rise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.

International Government bonds and corporate bonds generally have more moderate short-term price fluctuations than stocks, but provide lower potential long-term returns.

Investing in foreign domiciled securities may involve risk of capital loss from unfavourable fluctuation in currency values, withholding taxes, from differences in generally accepted accounting principles or from economic or political instability in other nations. Investments in emerging or developing markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The returns on a portfolio of securities which exclude companies that do not meet the portfolio's sustainable strategy criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's sustainable strategy criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.