WisdomTree, an exchange-traded fund (ETF) and exchange-traded product (ETP) sponsor, has launched the WisdomTree Germany Equity UCITS ETF – GBP Hedged (DXGP) on the London Stock Exchange (LSE).
DXGP is a unique ETF, designed to offer broad exposure to the German equity market, while hedging the currency fluctuations between sterling and the euro. This is the first German hedged equity ETF to be listed in Europe. DXGP includes dividend paying companies, which derive less than 80 per cent of their revenue from within Germany, thereby tilting toward exporters. Germany is generally considered a strong exporting country, and exposure to companies with more of a global revenue base should be favourable during periods of Euro currency weakness, as exporting organisations become more competitive overseas.
Hector McNeil, Co-CEO of WisdomTree Europe, says: “We are really pleased to be listing our first currency hedged ETF on the London Stock Exchange. The WisdomTree Germany Equity UCITS ETF – GBP Hedged (DXGP) is the first German hedged equity ETF in Europe. We also have more than USD16 million of client seed capital in DXGP, indicating the early interest and demand for the strategy.”
Viktor Nossek, WisdomTree Europe’s Director of Research, says: “The German equity market offers investors a cyclical and high beta play on Europe and the global macro backdrop. DXGP seeks to exploit this investment proposition by focussing on Germany’s export oriented companies. With monetary policy divergences – from the ECB’s quantitative easing policy which is expected to last until 2016, to the BOE likely to follow the Fed in hiking interest rates-the risk of the euro weakening relative to the pound remains high.
“Of particular relevance to this strategy, German equities have historically performed better during periods of euro weakness. However, the declining currency can be a drag on total returns for UK investors when converting back to the British pound. By hedging its exposure to the euro, DXGP offers a way to more fully access the return potential of German equities in a weakening euro environment.”