QE propels WisdomTree’s European hedged equity ETF through $10 billion mark

Feb 24th, 2015 | By | Category: Equities

ETF STRATEGY NEWS! ETF Strategy is delighted to announce the launch of ETF Strategy Hub (hub.etfstrategy.com), an on-demand repository of webcasts, videos, podcasts and white papers. Debuting with Special Series on Technology & Innovation in China and the Digital Economy.


The WisdomTree Europe Hedged Equity ETF (HEDJ) has shot through the $10 billion AUM milestone on the back of the European Central Bank’s recent announcement to embark on a €60 billion-a-month quantitative easing programme.

Quantitative easing propels WisdomTree’s European hedged equity ETF through $10 billion mark

The ECB’s recent quantitative easing announcement has propelled WisdomTree’s European hedged equity ETF through $10 billion AUM mark.

Having already enjoyed record inflows of $5 billion last year, the NYSE Arca-listed exchange-traded fund pulled in further $3 billion of inflows in January alone, more than any other ETF during the period and much of it following the ECB’s QE statement.

The underlying strategy coupled with the prospect of a weaker euro is behind investors’ appetite for the fund. Aggressive monetary policy from the ECB is continuing the weakening trend in the euro (earlier this year the single currency hit an 11-year low relative to the US dollar), which in turn is helping exporters who stand to benefit from a depreciating currency.

To profit from this scenario, investors need access to those companies most likely to benefit from a weaker euro (i.e. exporters), whilst at the same time hedging their currency exposure to the euro.  This is pretty much exactly what the HEDJ does.

The fund is composed of dividend-paying companies that are domiciled in Europe and are traded in euros, have at least $1 billion market capitalization and derive at least 50% of their revenue in the latest fiscal year from countries outside of Europe. Crucially, the fund also neutralizes exposure to the euro, hedging against fluctuations in the relative value of the euro against the US dollar.

Commenting on the fund, Luciano Siracusano, Chief Investment Strategist at WisdomTree, said: “There is uncertainty about the future of the euro and there could be more volatility to come. We believe this makes Europe an attractive place to neutralize currency exposure. A weakening euro may help boost the competitiveness of European exports, an element HEDJ seeks to take advantage of through its exporter tilt.”

Jeremy Schwartz, Director of Research at WisdomTree, added, “When thinking about international equity exposure, it’s important to remember there are two components of returns: equity movement, plus the currency movement, relative to the US dollar. So, if an investor does not have strong conviction on a currency’s future performance – the baseline allocation should not be 100% unhedged.”

WisdomTree is a global ETF issuer, with major operations in the US and Europe.

Tags: , , , ,

Leave a Comment