WisdomTree Japan ETF Creates ‘Windfall’ for Former Hedge Fund Manager Steinhardt
February 15th at 8:40am by John Spence
WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) has tripled in assets so far this year and helped boost former hedge fund manager Michael Steinhardt’s stake in ETF provider WisdomTree Investments (NasdaqGM: WETF), Bloomberg News reports.
The Japanese equity ETF, which hedges its currency exposure to a falling yen, has netted about $2.3 billion of inflows so far in 2013, according to IndexUniverse data.
“The fund took in more money than all but one U.S. ETF this year, helping to drive a 46% rally in WisdomTree’s stock,” Bloomberg reports.
Steinhardt is WisdomTree’s chairman and the largest shareholder. [WisdomTree Chairman Steinhardt Says ETFs Not Moving Stocks]
“When the stars align, funds like this can take off,” said Ugo Egbunike, an ETF specialist at IndexUniverse, in the article.
DXJ invests in Japanese stocks but hedges its exposure to the movement of the yen. Therefore, it has outperformed unhedged Japan ETFs as the yen plummets following the election of Shinzo Abe as prime minister. Abe is committed to pressuring the Bank of Japan to take further easing measures to weaken the yen and assist Japan’s struggling economy.
“Folks are looking for the Japanese exposure, but they are also looking to hedge the impact of the yen,” said Luciano Siracusano, WisdomTree chief investment strategist, on the firm’s fourth-quarter earnings conference call. [Japan Currency-Hedged ETF Hauls in Over $2 Billion on Falling Yen]
Because the money flowing into WisdomTree’s Japan fund is the result of a popular trade, it could reverse if sentiment changes, said Patricia Oey, an analyst at Morningstar, in the Bloomberg story. “If the yen strengthened, money could come out pretty quickly,” she said.
“The Japanese market moved in one direction for a long time,” WisdomTree research director Jeremy Schwartz countered in the report. “This new trend could last a considerable period.”
WisdomTree Japan Hedged Equity Fund
The opinions and forecasts expressed herein are solely those of John Spence, 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.