New WisdomTree ETF Offers a Currency Hedge
January 5th at 3:00pm by Tom Lydon
WisdomTree, a leading ETF sponsor and index developer, has launched a new exchange traded fund (ETF): WisdomTree International Hedged Equity Fund (NYSRArca: HEDJ). HEDJ is a “fund of funds.”
HEDJ is designed to provide exposure to the equity securities in Europe, Australasia and the Far East, while at the same time hedging currency movements in these regions versus the U.S. dollar. Investors can invest internationally with or without exposure to currencies, giving it a currency hedge, not an equity hedge.
Ron Rowland for Seeking Alpha says that HEDJ intends to enter into forward currency contracts or futures contracts in order to offset the fund’s exposure to non-U.S. currencies. The effect would be to deliver greater returns than an equivalent non-currency hedged investment when the U.S. dollar is going up in value relative to foreign currencies and lower returns when the U.S. dollar is falling.
The expense ratio is 0.58% for HEDJ and 0.48% on the underlying funds. When added together, it’s a 1.06% expense ratio. However, a portion of the management fees equal to the underlying fund fees will be waived, resulting in a net expense ratio of 0.58%. [More on currency ETFs.]
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