The WisdomTree Europe Hedged Equity Fund (HEDJ), an exchange-traded fund providing exposure to European dividend-paying exporters while hedging out euro movements relative to the US dollar, has surpassed USD1bn in assets.
While the Eurozone’s year-over-year gross domestic product (GDP) growth rate turned positive for the first time in two years, there are increasing calls for the ECB to take further actions to support the recovery in Europe.
Inflation levels in Europe have been trending downwards and the ECB may feel compelled to help prevent declining inflation from turning into deflation, or declining price levels.
When an unhedged investment is made in foreign securities, the investor is not only taking on the equity exposure but also the currency risk, potentially increasing the overall volatility of the investment.
“Investors who want to participate in Europe’s economic recovery, but are concerned about the fluctuation of the currency should consider the WisdomTree Europe Hedged Equity Fund (HEDJ),” says Jeremy Schwartz, WisdomTree director of research. “Currency moves are difficult to predict. Investors should ask themselves: ‘Do I want a secondary currency exposure on top of local equity returns?’ If there is little cost to hedge, as is currently the case in Europe, we believe taking the risk unhedged should be left to investors with full-faith in the direction of the euro.”