Core Viewpoint - iShares Currency Hedged MSCI EAFE Small-Cap ETF (HSCZ) offers targeted exposure to developed small-cap equities outside the U.S. while mitigating currency fluctuation impacts against the U.S. dollar [1] Group 1: Investment Proposition - The fund aims to replicate a diversified small-cap universe and employs a forward-hedging strategy to ensure equity fundamentals dominate returns rather than foreign exchange translation [1] - The investment opportunity focuses on domestically oriented businesses that are more sensitive to local demand, policy changes, and regional supply chains, leading to greater dispersion compared to large-cap equities [1] - Hedging can reduce volatility from currency fluctuations but may introduce implementation costs and basis risk related to interest-rate differentials [1] Group 2: Use Cases and Suitable Investors - HSCZ can serve as a size tilt within international allocations, act as a satellite for factor completion when portfolios are underweight in small caps, and provide a tactical overlay when concerns about a stronger dollar arise [1] - Suitable investors include those seeking clearer attribution to local equity drivers and outcome-oriented strategies that prioritize returns in home currency [1] Group 3: Market Conditions and Risks - Supportive market conditions for HSCZ often include periods of dollar strength or phases when domestic catalysts drive small-cap earnings, while it may be less advantageous during foreign currency appreciation [1] - Key fund-specific risks involve hedge implementation and roll costs, which can increase tracking differences, along with the higher volatility and liquidity risks typically associated with small-cap equities [1]

Core Viewpoint - iShares Silver Trust (SLV) offers direct exposure to silver prices, allowing investors to express views on precious metals without company-specific risks [1] Group 1: Investment Strategy - The strategy aims to mirror spot silver movements, with returns driven by metal supply-demand, currency trends, and investor risk appetite [1] - SLV serves as a tactical overlay for inflation or currency hedging, a diversification tool due to low long-run correlation with many financial assets, or a targeted satellite for precious metals mandates [1] Group 2: Characteristics and Risks - As a single-commodity holding, SLV is concentrated and non-income producing, leading to potentially volatile performance sensitive to real rates and dollar fluctuations [1] - Silver's dual role as a monetary metal and industrial input introduces cyclical characteristics that may diverge from gold, adding beta related to manufacturing and electronics alongside inflation and policy expectations [1] - A key risk is the concentration in a single commodity, where sharp price movements and sentiment shifts can significantly impact outcomes compared to broader multi-asset exposures [1]

Core Viewpoint - The WisdomTree Japan Hedged Equity Fund (DXJ) effectively mitigates currency risk for U.S. investors, allowing them to benefit from Japanese equity returns without the adverse effects of yen fluctuations, achieving a 34% return in 2024 compared to 16% for the S&P 500 [1][3]. Group 1: Fund Performance - DXJ returned 34% in 2024, outperforming the S&P 500's 16% return [3]. - The fund's currency hedging contributed over 7 percentage points of outperformance compared to unhedged Japanese equities in 2024 [4]. - The unhedged alternative, iShares MSCI Japan ETF (EWJ), returned 27% during the same period, highlighting the impact of currency movements on returns [4]. Group 2: Fund Composition and Strategy - DXJ holds 430 Japanese companies that pay dividends and derive at least 20% of their revenue from outside Japan, including major exporters like Toyota, Mitsubishi UFJ Financial, and Sumitomo Mitsui Financial [2]. - The fund employs forward currency contracts to neutralize yen-dollar fluctuations, enabling investors to capture Japanese equity returns without currency headwinds [2]. Group 3: Income and Expenses - DXJ offers a yield of 3.1%, providing modest income alongside potential capital appreciation, although dividend distributions can be volatile due to underlying equity dividends and hedging gains or losses [5]. - The fund charges a 0.48% expense ratio, which is reasonable for an actively hedged strategy but higher than that of broad market index funds [6]. - With $4.8 billion in assets, DXJ provides sufficient liquidity and trades at approximately 16 times earnings, which is attractive compared to U.S. large caps [6]. Group 4: Risks and Trade-offs - Currency hedging can be a double-edged sword; when the yen strengthens, unhedged investors benefit from favorable currency translation, while DXJ holders miss out, leading to potential underperformance of DXJ compared to EWJ [7]. - Investors are essentially betting that the yen will remain weak or that Japanese equities will rise sufficiently to offset any currency-related losses [7].

Currency Hedging Strategy - Taiwan's life insurers are poised to increase currency hedging from near record lows [1] - The goal is to protect overseas assets from fluctuations in the local dollar (New Taiwan dollar) [1]