Hedge Foreign Currency Moves With This WisdomTree ETF
“The recently launched ETF is WisdomTree International Hedged Equity Fund (HEDJ). The underlying holdings are other ETFs managed by WisdomTree (WSDT), so it’s structured as a so-called fund of funds–or more accurately, an ETF of ETFs. The fund currently invests in a trio of ETFs: WisdomTree Europe Total Dividend Fund (DEB), WisdomTree Japan Total Dividend Fund (DXJ) and WisdomTree Pacific ex-Japan Total Dividend Fund (DND). Its expense ratio is 0.58%, which includes the fees of the fund’s underlying ETFs. WisdomTree Chief Operating Officer Bruce Lavine said there are more than 250 international-stock ETFs on the market, but all come with foreign-currency exposure,” John Spence Reports From The WSJ.
“The dollar has fallen quite a bit, but if the economy improves some think we could see a stronger dollar,” Levine said in an interview. “This is a way to stay invested in international stocks rather than dumping them on a rising dollar. The ETF takes currency concerns off the table.”
“The ETF’s tracking index is an in-house benchmark called the WisdomTree DEFA International Hedged Equity Index. The fund holds forward currency contracts or futures contracts designed to offset its exposure to non-U.S. currencies, according to the prospectus. The ETF is similar to the existing WisdomTree DEFA Fund (DWM), which tracks the WisdomTree Dividend Index of Europe, Far East Asia and Australasia (DEFA) Index. However, the newer ETF attempts to hedge foreign-currency moves,” Spence Reports.
“The WisdomTree DEFA Index is a basket of dividend-paying stocks in developed international markets. Lavine said hedged and unhedged versions of the index can see wide performance differences in any given year. For example, he said in 2009 the hedged index gained 25.1%, while the unhedged version rose 32.5%. “The dollar was crunched last year so the unhedged index did better, which was the reverse of what happened in 2008,” Lavine said, adding that currency moves can be a “very dramatic factor” in international stock funds,” Spence Reports.
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