European Central Bank President Mario Draghi finally gave
global markets something to cheer about earlier today when he
announced the ECB lowered its benchmark interest rate to 0.5
percent from 0.75 percent.
Perhaps more importantly, Draghi has left the door open to
further monetary easing and perhaps taking the ECB deposit rate
to negative territory from the current level of zero,
Draghi has not yet gone the way of his Japanese counterpart,
new Bank of Japan Governor Haruhiko Kuroda. However, if Draghi
does take a stroll down Unlimited Easing Boulevard, the
WisdomTree Europe Hedged Equity Fund (NYSE:
) stands as an obvious ETF beneficiary of potentially ultra-loose
ECB monetary policy.
With the stunning success of the WisdomTree Japan Hedged
Equity Fund (NYSE:
), the top asset-gathering U.S.-listed ETF in 2013, investors are
acknowledging the power of hedged currency strategies. Regarding
HEDJ, the ETF is being colloquially referred to as "DXJ for
The comparison is accurate because, as DXJ does with the yen,
HEDJ hedges euro exposure. And like DXJ, HEDJ's lineup is tilted
heavily toward exporters, not companies that are dependent on
Eurozone domestic economies for the bulk of their revenue.
"These companies are selected if they are domiciled in Europe
and if more than 50% of their revenues come from outside Europe,"
said WisdomTree Research Director Jeremy Schwartz in a note.
HEDJ's story is an interesting one. In late August 2012,
WisdomTree converted HEDJ from a multi-region, multi-currency
to one focused exclusively on Europe-based
While DXJ has clearly been the apple of investors' currency
hedged ETF eyes, HEDJ has enjoyed a staggering asset-gathering
run of its own. On October 15, 2012,
HEDJ had $21.7 million in AUM
. That number was $242 million as of May 1, a better than
eleven-fold increase in seven months.
And like DXJ, HEDJ is delivering for investors.
"The WisdomTree Europe Hedged Equity Index had positive
performance attribution in 8 out of 10 sectors. The WisdomTree
Europe Hedged Equity Index was up 5.46% through 04/15/2013,
compared to the MSCI EMU Local Currency Index, which returned
2.07% for the same period,"
The MSCI EMU Local Currency Index is the index tracked by the
iShares MSCI EMU Index Fund (NYSE:
). Year-to-date, EZU is up 2.5 percent. HEDJ was up four percent
prior to Thursday's 1.4 percent gain.
HEDJ also offers something for conservative investors with a
combined 36.5 percent weight to staples and health care names.
Additionally, the ETF's weight to financial services names is
just 7.7 percent. Sector weights aside, current holders of HEDJ
likely have just one message for Draghi: "Ease baby, ease."
For more on
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.