Japan has two. Even Brazil has one. So why not a hedged
currency ETF for the U.K.? Today's debut of the WisdomTree United
Kingdom Hedged Equity Fund (
) takes care of that as the new ETF becomes the first to offer
investors of a way of investing in U.K. stocks while hedging
fluctuations in the British pound/U.S. dollar currency pair
Issuer WisdomTree has already attained success on the currency
hedged front with the $9.4 billion WisdomTree Japan Hedged Equity
). The WisdomTree Europe Hedged Equity Fund (NYSE:
). That ETF was converted to a
hedged euro dividend ETF
last August. That helped ratchet the fund from relative to
obscurity to raking in almost $280 million in assets this
The WisdomTree United Kingdom Hedged Equity Fund looks to
build on that success and will be in direct competition with the
unhedged iShares MSCI United Kingdom Index Fund (NYSE:
"We believe DXPS offers investors a unique way to capitalize
on the growth potential of leading global companies in the U.K
while hedging exposure to the British pound. Moreover, we believe
the upcoming appointment of Mark Carney as Governor of the Bank
of England (
) represents a potential near-term catalyst, with Carney's
reputation as a forward thinking Governor who may enact bold
policies to reinvigorate the U.K economy",
said WisdomTree Research Director Jeremy
There are obvious advantages to hedging the yen, namely that
Japanese stocks benefit from a weak currency. Additionally, the
euro is viewed by many market observers as overvalued relative to
other developed market currencies, potentially putting HEDJ in a
position to benefit if the European Central Bank
employs additional stimulus measures
But what about hedging the pound? Is this a move investors
should consider? The data indicate the answer is "yes." Over the
past decade, investors could have trimmed volatility in U.K.
stocks by about 430 basis points by hedging pound exposure,
according to WisdomTree
In the past 12 months, the volatility for the iShares MSCI
United Kingdom Index, the index tracked by EWU, is 8.08 percent.
Remove sterling from the equation and that number drops to 6.48
At the sector level, DXPS is dominated by staples, financial
services and energy names with those groups combining for over 54
percent of the ETF's weight. Material and health care also
receive double-digit allocations.
Top-10 holdings in the new ETF include a familiar batch of
U.S.-listed names such as Vodafone (NYSE:
), BP (NYSE:
), Royal Dutch Shell (NYSE: RDS-A) and BHP Billiton (NYSE:
DXPS has an annual expense ratio of 0.48 percent, slightly
lower than the 0.5 percent charged by the $2 billion EWU.
For more on
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