Three ETFs That Insulate Against a Falling Dollar (EFA, PID, DIM)

Roger Nusbaum submits: Regular reader 'retiredinprescott' asks:

Roger, do you think these three ETFs are also a play on a declining US dollar?

He is referring iShares EAFE (EFA), PowerShares Intl Div Achievers (PID) and WisdomTree Intl Mid Cap Div Fund (DIM).

The short answer is yes.

Any type of foreign exposure insulates against a weak dollar. Depending on the specifics of the foreign exposure you may insulate a lot or a little against a weak dollar. For example, Turkey is in the middle of a rough patch. Turkish assets won't necessarily help for the time being.

The three funds mentioned above may or may not be ideal foreign exposure (I own PID for a couple of clients), but from the top down the first decision needs to be do you want foreign exposure, yes or no? From there, top down process would be to figure out the best way to capture foreign exposure. The three funds are fairly broad, which is a valid way to go, or you could choose a narrow approach with individual stocks or single country products.

PID and all of the WisdomTree International funds help solve an issue I have been writing about for a while, which is the tradeoff between yield and diversification.