ETF Spotlight: Emerging Currencies

March 2nd at 7:41am by Tom Lydon

ETF Spotlight on WisdomTree Dreyfus Emerging Currency Fund (NYSEArca: CEW), part of an ongoing series.

Assets: $350.6 million.

Objective: The WisdomTree Dreyfus Emerging Currency Fund tries to reflect the performance of both money market rates in select emerging countries and changes in value of the currencies relative to the U.S. dollar.

Holdings: Asset classifications include: Treasury Bills 71.7%, Repurchase Agreements 27.8% and Money Market funds 0.5%.

What You Should Know:

  • WisdomTree Investments sponsors the fund.
  • CEW has an expense ratio of 0.55%.
  • Constituent currencies include: Polish zloty 8.8%, Russian ruble 8.7%, South African rand 8.5%, Turkish new lira 8.4%, Brazilian real 8.4%, Chilean peso 8.3%, Mexican peso 8.3%, Malaysian ringgit 8.3%, Indian rupee 8.3%, South Korean won 8.1%, Indonesian rupiah 8.0% and Chinese yuan 8.0%.
  • The fund is up 1.8% over the past month, up 8.0% over the last three months and up 7.8% year-to-date.
  • The ETF is 2.5% above its 200-day exponential moving average.
  • CEW has a distribution yield of 4.98%.

The Latest News:

  • Emerging market currencies are rallying after the European Central Bank’s decision to inject liquidity into the Eurozone banking system.
  • The increased liquidity devalues the euro currency against a basket of international currencies, making other currencies much more attractive.
  • According to a new International Monetary Fund research paper, emerging markets should take greater action in using exchange rate intervention, especially when external economic shocks affect their currencies, reports Ian Talley for The Wall Street Journal.
  • “If two policy instruments are available (the policy interest rate and foreign exchange market intervention), then they should be used in tandem to achieve both price-stability and exchange-rate objectives,” economists wrote in the paper.
  • The economists also noted that since sustained exchange rate intervention is too costly, emerging economies should allow the currency to adjust freely during permanent market pressures.

WisdomTree Dreyfus Emerging Currency Fund

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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