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As a smart investor, you may be investing overseas to diversify your portfolio. However, you may not realize that in doing so you are actually making two investments – one in the international stocks or bonds and one in the foreign currency they are issued in.

Since currency can meaningfully impact your total return, it pays to understand how it works and whether it makes sense to hedge your currency risk.

Is a strong dollar weakening your international investments?

How big is the potential impact?

When you invest internationally, there is a currency conversion both at the beginning of the transaction and at the end. For example, to buy European stocks you first have to exchange U.S. dollars to euros; when you sell you get euros backs, which you then have to exchange back into U.S. dollars.

Use this calculator to explore how currency return and the two-part conversion process can affect your total return.


The analysis presented above assumes that US dollars are converted to a foreign currency in order to make an investment in local securities, then converted back to US dollars upon divestment. Any results derived from the above calculator are for illustrative purposes only and not representative of any specific investment outcome.

Peter Fisher, Senior Director of The BlackRock Investment Institute and former U.S. Treasury Under Secretary for Domestic Finance, discusses currency hedging

iShares Currency Hedged ETFs: A Helpful Solution

iShares Currency Hedged ETFs make it easy to manage currency risk in your portfolio. Learn more about our comprehensive currency hedged suite, which spans global, regional, and single country exposures.

Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting the iShares Fund and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.

International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/ developing markets or in concentrations of single countries.

The Fund's use of derivatives may reduce the Fund's returns and/or increase volatility and subject the Fund to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. The Fund could suffer losses related to its derivative positions because of a possible lack of liquidity in the secondary market and as a result of unanticipated market movements, which losses are potentially unlimited. There can be no assurance that the Fund's hedging transactions will be effective.

The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.

The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

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