What are the hot exchange-traded fund investments for 2015? Here's what's got investment advisers talking at the annual Inside ETFs conference in Florida.
1) 2015: The year of the currency hedge.
The Swiss National Bank's surprise decision to abandon its currency peg with the euro, along with the imminent adoption of quantitative easing by the European Central Bank, has got global investors running to hedge currency exposure. Global banks everywhere are rushing to lower rates and cheapen their currency.
The hot ETF entering 2015 is the Wisdom Tree Europe Hedged ETF, which gives exposure to European stocks but hedges out the weak euro. It took in $5 billion last year and is still taking on assets. The difference between hedged and unhedged Europe was 12 percent last year.
This follows on the phenomenal success of the WisdomTree Japan Hedged Equity ETF (DXJ), which hedges out the yen and now has $12 billion in assets.
2) Low-volatility ETFs make a comeback.
The big worry at the conference is volatility. We are in for more of it. Already, the Dow Industrials has been trading in a 200-point range on a daily basis in January, well above the 2014 average of roughly 125 points.
There are concerns about the ripple effects of low oil, a possible Russian debt default, a Greek exit from the euro zone, and a possible shock to interest rates should the Federal Reserve decide to hike rates.
What does that mean? It means that minimum volatility products, which concentrate on stocks that will move the least in times of market turmoil, have again generated interest. The two biggest products are the S&P 500 Low Volatility and MSCI USA Minimum Volatility.