Hedging
US Dollar (USD).

How USD hedging actually works

The retail-grade hedge for an EU resident with USD obligations is to hold matching USD cash in a multi-currency wallet (Wise, Revolut, Bunq) — this is a 1:1 natural hedge against EUR/USD fluctuations on the matched amount. For longer-dated or larger exposures, currency-hedged ETFs (often labelled 'EUR Hedged') do the institutional FX swap internally and pass the EUR-equivalent return through; these are available via Trade Republic and Revolut brokerage. True FX forwards and options are not available at EU neobanks — they require a corporate banking relationship.

Watchouts and hidden costs

Currency-hedged ETFs incur a hedging cost (typically 0.1–0.3% per year on top of the fund TER) — for short holding periods, the cost can exceed the benefit. Natural hedging via a multi-currency wallet is free but requires holding USD cash, which has opportunity cost vs deploying that EUR elsewhere. For material exposures, consult a regulated investment advisor — the products available to retail EU residents are not designed for institutional hedging.

Can I do FX hedging at an EU neobank?

Retail FX hedging products (forwards, options, swaps) are not currently offered at EU neobanks — these require a corporate banking relationship or a regulated FX broker. The retail-available alternatives are natural hedging via a multi-currency wallet (matching USD cash to USD obligations) or buying a currency-hedged ETF.

Is a multi-currency wallet a real hedge?

Holding USD cash 1:1 against USD obligations is a natural hedge — your EUR-equivalent exposure to EUR/USD fluctuation on the matched amount is zero. Wise, Revolut, and Bunq all support USD balances in their multi-currency wallets. The opportunity cost is that the USD cash earns less yield than alternative EUR deployments.

What is a currency-hedged ETF?

A currency-hedged ETF (often labelled 'EUR Hedged') invests in USD-denominated assets but uses institutional FX forwards to convert the USD returns back to EUR continuously — the EUR investor receives the underlying asset return without the EUR/USD FX volatility. The hedging cost is typically 0.1–0.3% per year on top of the fund TER.