emerging markets ETF and currency hedging

christina · Post by **christina** » Tue Oct 11, 2011 8:28 am

I'm trying to figure out how to invest in foreign markets, including US, developed foreign, and emerging markets.

The ETFs that are denominated in canadian dollars all seem to track an underlying US ETF, and then they are hedged to Canadian dollars.

The hedging thing confuses me. I don't 100% understand it. Plus it seems like your making bets on currencies (?).

My current thinking is that despite the hedging, I still need to get one of these ETFs so that I don't have to pay currency conversion charges when I buy and sell. So even though VTI and VWO have way lower MERs, they will still be more expensive to hold due to the currency conversion fees.

Is this about right?