The MSCI Europe Index, which serves as a proxy for European stock markets, delivered a respectable 5 percent gain in 2014. Yet for U.S. investors, the surging dollar wiped out those gains, generating a 6 percent loss last year on a dollar-denominated basis.

Investors quickly realized how to fix the problem: exchange-traded funds that hedge against currency moves. The WisdomTree Europe Hedged Equity Fund (HEDJ), for example, has been the leading destination for ETF investors thus far in 2015, attracting $4.3 billion in inflows through February 18, according to ETF.com. The Deutsche X-trackers MSCI Europe Hedged Equity ETF (DBEU) is the seventh most popular ETF so far this year, pulling in more than $2 billion and effectively doubling in size as a result.

Performance has begat popularity (and vice versa), as the HEDJ has gained 13.5 percent gain over the past three months and the DBEU has generated a 7.4 percent return. Compare that to a more modest 4 percent gain for the iShares MSCI EMU ETF (EZU), an unhedged European fund.

Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ, says HEDJ has led the pack because its focus on European companies that derive at least half of their sales outside of the EU enable the fund can better capitalize on the export opportunities being generated by a weaker euro.

Though these two ETFs target the same investment theme, they pursue distinct strategies. The HEDJ fund, for example, focuses on companies in eurozone countries with at least $1 billion in market value and which derive at least half of sales outside of Europe—a key consideration as the falling euro starts to boost export competitiveness.

This fund also weights its holdings in relation to the size of a company’s dividend. That approach leads to a 40 percent weighting in consumer stocks, with industrial/materials stocks comprising another 24 percent of the fund. Anheuser-Busch Inbev NV, Spain’s Telefonica and automaker Daimler are the fund’s top three holdings.

In contrast, the DBEU fund, which is based on the MSCI Europe Index, also includes non-euro companies based in the U.K. and Switzerland. Though many of the fund’s holdings offer solid dividends, that factor is not a consideration for inclusion in the MSCI index.

The DBEU fund, which is heavy in financials (22 percent of the portfolio) and consumer staples (19 percent), counts Nestle, Novartis and Roche Holdings as its top holdings. While the top 10 stocks in the HEDJ fund account for more than 45 percent of the fund, DBEU is much more diversified with its top 10 holdings accounting for less than 20 percent of the fund.

For investors, the big question is whether the good times can last for these funds. They can, with a few key caveats. The primary ongoing catalysts—a highly stimulative monetary policy by the European Central Bank and an increasingly competitive currency—are boosting the odds that Europe can finally break out of its extended economic malaise.

But the currency-hedged ETFs likely will eventually lose a key edge, relative to their non-hedging peers. Namely, the euro had been worth around $1.40 versus the dollar in the spring of 2014, but is now worth just $1.14. The two currencies are expected to reach parity sometime during the next 12 to 24 months, according to economists at Goldman Sachs and Deutsche Bank. In other words, if these forecasters are correct that means the currency adjustment is roughly two-thirds complete.

Economists believe the dollar will keep rallying in the near-term for two reasons. First, the U.S. economy is the fastest-growing in the developed world, which is attracting global asset flows onto our shores.

Second, the U.S. Federal Reserve is reputedly on the cusp of a tightening cycle. When that happens, “capital flows should favor U.S. Treasuries over lower-yielding German Bunds and other sovereign debt, strengthening the U.S. dollar even further,” Dodd Kittsley, Deutsche Bank’s head of ETF strategy, wrote in a recent blog post. Kittsley scoffs at the notion that the dollar has overshot the mark and is due to weaken. “While the trade-weighted dollar has appreciated 14 percent over the past four years, it remains far below its historical highs.”

If and when the Fed does start to raise rates, these hedged ETFs should actually benefit. “Higher interest rate differentials lead to income streams for the ETFs as forward currency contracts gain in value,” says Jeremy Schwartz, research director at WisdomTree Investments. That gain should help mitigate the expense ratios at these funds, which stand at 0.58 percent and 0.45 percent for HEDJ and DBEU, respectively.

Schwartz believes currency-hedged ETFs are not just a fad, but instead will likely remain in favor over the long haul. “Most people have historically assumed currency risk in building global portfolio exposure, but why would you ever want exposure to the euro?” he asks. 

The HEDJ and DBEU funds have delivered what they have promised over the past few quarters. And the stars are aligned for continued outperformance in the near-term. Yet these aren’t set-it-and-forget-it ETFs. European stock valuations already reflect some of the anticipated European economic upturn. At some point, trend-oriented investors will yank money out of these funds, and shift into lower-cost ETFs to retain their long-term European exposure.