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WisdomTree Europe Hedged Equity ETF (HEDJ)

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  • Fri, Apr. 24, 2:55 PM
    • Investors have rushed $13B into WisdomTree's (NASDAQ:WETF) Europe Hedged Equity ETF (NYSEARCA:HEDJ) this year, bringing AUM to $20B, and making it 2015's most popular ETF, the largest Europe ETF out there, and the largest currency-hedged ETF, according to Ned Davis Research.
    • The fund is also ahead 30% YTD - not too shabby. However, says NDR, all of the gains have come from the euro's depreciation. A strategy of buying the MSCI EMU Index (NYSEARCA:EZU) and shorting the euro would have returned 70% over the same period. In other words - amid a nice bull move in Europe - HEDJ's strategy of owning exporters, which should theoretically gain as the euro slides, hasn't worked (the fund must own mega-cap stocks deriving more than 50% of revenue from outside Europe).
    • What gives? First, Europe's exporters have been hit by exposure to struggling LatAm countries. Second, the companies in the HEDJ already hedge currency exposure, booking it as an expense. Finally, the valuation of stocks in HEDJ trade at a 52% premium to  a broad MSCI eurozone index.
    • Source: Barron's
    • Previously: WisdomTree stumbles as GMO questions value of currency-hedged ETFs (April 14)
    • Previously: WisdomTree hedged small-cap Europe ETF opens for business (March 4)
    • ETFs: VGK, FEZ, HEDJ, IEV, EPV, EZU, FEU, EURL, FEP, UPV, DBEU, ADRU, HEZU, FEEU, IEUR, FIEU, DBEZ, FEUZ, SBEU
    | 7 Comments
  • Wed, Apr. 22, 4:01 PM
    • "After an examination of three of the most successful currency hedged products, we believe first to market is far and away the most important driver of product success," says Susquehanna's Doug Sipkin, bullish on WisdomTree's (NASDAQ:WETF) ability to continue to pull in the lion's share of inflows into currency-hedged ETFs, even with rivals like Deutsche an BlackRock offering competing products.
    • Four of this year's top 10 ETF flow recipients this year are currency hedged, writes Chris Dieterich, with WisdomTree's Europe Hedged Equity Fund (NYSEARCA:HEDJ) pulling in $13B, Deutsche's EAFE Hedged Equity ETF (NYSEARCA:DBEF) $8.7B, WisdomTree's Japan Hedged Equity ETF (NYSEARCA:DXJ) $3.2B, and iShares' Currency Hedged MSCI EAFE ETF (NYSEARCA:HEFA) $2.3B.
    | 1 Comment
  • Fri, Apr. 17, 7:36 AM
    • All the headlines say it's worry over Greece, but Europe was doing just fine in morning action until news hit about a big expansion in short-selling in China (after markets in China had closed for the session). Chinese futures have subsequently tumbled, and any China ETFs trading in the premarket are sharply lower despite gains in Shanghai overnight.
    • Germany (NYSEARCA:EWG-1.7%, France (NYSEARCA:EWQ) -1.2%, Italy (NYSEARCA:EWI-1.8%, Spain (NYSEARCA:EWP-1.8%, U.K. (NYSEARCA:EWU-0.75%. Stocks in Athens (NYSEARCA:GREK) are lower by 0.9%.
    • Previously: China allows big boost in short selling (April 17)
    • ETFs: VGK, FEZ, HEDJ, IEV, EPV, EZU, FEU, EURL, FEP, UPV, DBEU, ADRU, HEZU, FEEU, IEUR, FIEU, DBEZ, FEUZ, SBEU
    | Comment!
  • Tue, Apr. 14, 3:18 PM
    • While many investors cite volatility reduction as a rationale for currency hedging, a white paper from GMO's Catherine LeGraw argues: 1) Volatility may be cut over the short-term, but not over longer horizons; 2) Volatility benefits have been reduced over time as companies become more global; 3) Even if volatility is lowered for international holdings, it isn't reduced for the whole portfolio as the hedging simply makes holdings more correlated with U.S. stocks; 4) Hedging introduces leverage and hence tail risk (see the move in the Swiss franc).
    • WisdomTree (WETF -2.6%) has ridden a couple of star currency-hedged funds - DXJ and HEDJ to big profits.
    • There's also Deutsche's DBEF, and not surprisingly a bunch more have recently come to market like [[DBRE}} and DBIF. BlackRock this week filed for 11 new currency-hedged ETFs.
    • LeGraw: "Currency management is a useful tool when done for the right reasons: because of a high-conviction view, or a desire to mitigate an identified risk exposure. We caution that a simple currency hedging strategy may not achieve these objectives.”
    | 7 Comments
  • Thu, Apr. 9, 5:24 AM
    • European stocks track gains on Wall Street following positive German trade data this morning and yesterday's release of the FOMC minutes, which provided little clarity on when the Fed might hike rates but was deemed as sufficiently dovish.
    • Reports that Greece has paid - or will pay today - a €450M loan tranche to the IMF is also adding to the positive sentiment. "The news on Greece is helping push European markets higher, although it doesn't mean at all that a long-term solution has been reached," says market analyst Alexandre Baradez of IG France.
    • Euro Stoxx 50 +0.4%, London +0.6%, Paris +0.7%, Frankfurt +0.3%, Madrid +0.3%, Milan +0.5%.
    • ETFs: VGK, FEZ, IEV, HEDJ, EPV, EZU, FEU, FEP, UPV, EURL, ADRU, FEEU, DBEU, IEUR, FIEU, ESTX, HEZU, SBEU, DBEZ, FEUZ
    | Comment!
  • Tue, Apr. 7, 4:19 AM
    • The eurozone services PMI rose to 54.2 (flash 54.3) in March from 53.7 in February.
    • Composite PMI increased to an 11-month high of 54 (flash 54.1) from 53.3. (PR)
    • German services PMI grew to 55.4 from 54.7; composite PMI 55.4 vs 53.8. (PR)
    • French services PMI slowed to 52.4 from 53.4 and composite PMI to 51.5 from 52.2. (PR)
    • "Ireland and Spain continued to lead the charge, backed up by a fast-improving German economy," says Markit, but "rates of expansion in Italy and France were modest in comparison."
    • While "the PMIs are indicating somewhat sluggish GDP growth of 0.3% for the first quarter," says Markit, "the pace of expansion looks set to gather pace in coming months."
    • However, "an ongoing recovery is no one-way bet," Markit warns, "with the Greek crisis remaining a critical threat to stability in the region."
    • The euro takes a dive and is -0.1% at $1.0906.
    • ETFs: VGK, EWG, FEZ, GREK, EWP, EWI, IEV, HEDJ, EU, EPV, EUFN, EZU, EWQ, EIRL, FEU, EWN, GUR, FEP, EWGS, ESR, UPV, EURL, DBGR, DAX, ADRU, FEEU, DXGE, FGM, DBEU, QDEU, IEUR, FIEU, HEWG, QESP, HEZU, ESTX, DBEZ, SBEU, FEUZ
    | 3 Comments
  • Mon, Mar. 30, 12:31 PM
    • The WisdomTree Europe Hedged Equity ETF (HEDJ +1.2%) has been a popular target for investor dollars this year - gathering $10B of assets while rising 16.6%.
    • S&P Capital IQ's Todd Rosenbluth is as bearish on the euro as the next guy, but he suggests some of the fund's most heavily-weighted holdings are expensive, particularly consumer staples, which account for 23% of the ETF's assets. In fact, says Rosenbluth, the three largest consumer staples stocks in HEDJ - Anheuser-Busch, Unilever, and L'Oreal - are all rated Sell by S&P Capital IQ.
    • Now all three of these names are in other European ETFs - including currency-hedged ones like HEZU and EZU - but not in such a high concentration.
    • Rosenbluth: "We think investors need to be careful when reviewing European ETFs and understanding not just whether they are hedged."
    • Source: Barron's
    • ETFs: VGK, FEZ, IEV, HEDJ, EPV, EZU, FEU, FEP, UPV, EURL, ADRU, FEEU, DBEU, IEUR, FIEU, ESTX, HEZU, SBEU, DBEZ, FEUZ
    | 5 Comments
  • Fri, Mar. 27, 12:28 PM
    | 9 Comments
  • Tue, Mar. 24, 9:53 AM
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  • Fri, Mar. 20, 8:30 AM
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  • Thu, Mar. 19, 11:03 AM
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  • Tue, Mar. 17, 12:21 PM
    | 1 Comment
  • Tue, Mar. 10, 11:10 AM
    • "European equities offer investors a historic yield pick-up over both corporate and government bonds," says Citigroup, noting stocks there haven't been this cheap compared to credit in more than 50 years.
    • The team boosts its year-end target on the Stoxx 600 to 450 from 400, and vs. Monday's 393 close. The "grey-sky" scenario for year-end 2016 is 550, but the "blue-sky" scenario is 670, about 70% upside from current levels.
    • "While interest rates are unlikely to remain at current historic lows forever, it is reasonably likely that interest rates over the next five years will, on average, remain low compared to the last couple of decades."
    • Citi's call isn't exactly a contrarian one. The Stoxx 600 is already higher by about 15% this year and $35.1B has flowed into European equity mutual funds and ETFs. Citi retorts that's this is just getting started, noting institutional types have been significant net sellers of European equities for many years, and equity market inflows have been dwarfed by what's poured into fixed income.
    • ETFs: VGK, FEZ, IEV, HEDJ, EPV, EZU, FEU, FEP, UPV, EURL, ADRU, FEEU, DBEU, IEUR, FIEU, ESTX, HEZU, SBEU, DBEZ, FEUZ
    | 2 Comments
  • Thu, Mar. 5, 4:06 AM
    • The ECB is expected to focus on improved growth prospects when it meets today, and unveil some details of its 1T+ euro bond buying plan.
    • The bank is expected to keep interest rates on hold and lift growth forecasts after a string of positive data surprises. But with inflation at -0.3% in February, the bank could reverse its 0.7% inflation forecast for 2015 and predict deflation.
    • Markets will also be looking for guidance for on how quantitative easing will work, when the buying will start, whether it applies to paper with negative yields and how the purchases will be distributed along the yield curve. The ECB previously said money printing would last until September 2016 at least.
    • ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR, VGK, FEZ, IEV, HEDJ, EPV, EZU, FEU, FEP, UPV, EURL, ADRU, FEEU, DBEU, IEUR, FIEU, ESTX, HEZU, SBEU, DBEZ, FEUZ
    | 2 Comments
  • Wed, Mar. 4, 10:12 AM
    • Complimenting its fast-growing-in-popularity hedged European large-cap, exporter-focused ETF HEDJ, WisdomTree (NASDAQ:WETF) launches the Europe Hedged SmallCap Equity ETF (NYSEARCA:EUSC), whose holdings theoretically will be more levered to local European economic growth.
    • Source: Press release
    • Good timing: Down 0.8% to $1.1008, the euro is at more than a decade-low vs. the greenback.
    | Comment!
  • Mon, Feb. 23, 3:58 PM
    • Helped along by the euro's relentless plunge, WisdomTree (NASDAQ:WETF) has another hit with its Europe Hedged Equity Fund (NYSEARCA:HEDJ). Its market cap of $11.2B is up more than 10-fold in one year, and trails current number one, the Vanguard FTSE Europe ETF (NYSEARCA:VGK) by just $1.2B in assets (as for Seeking Alpha subscribers, there are 1,777 for VGK vs. 337 for HEDJ).
    • "This is an excellent type of vehicle to go for with a currency in free- fall," says Interactive Brokers' Andrew Wilkinson, quickly summing up HEDJ's appeal.
    • Previously: WisdomTree a possible European QE winner (Feb. 20)
    | Comment!
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HEDJ Description
The Fund will seek to track the performance of the WisdomTree Europe Hedged Equity Index. The Index and Fund are designed to have higher returns than an equivalent non-currency hedged investment when the value of the U.S. dollar is increasing relative to the value of the euro, and lower returns when the U.S. dollar declines against the euro. The Fund will invest in stocks of European companies with significant revenue from exports.
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