It’s been a long time coming, but WisdomTree’s new emerging markets currency exchange traded fund (ETF) is finally here.
Investors have been eagerly awaiting WisdomTree’s newest fund for some time, but a global recession happened along the way. Luciano Siracusano, chief investment strategist at WisdomTree, says challenged markets were the culprit in the holdup.
“When Lehman [Brothers] blew up, there was a tremendous pullback of anything risky, and it pushed up the value of the dollar,” he says. “International emerging currencies very much retrenched in that period.”
But now that investors who have been sitting in cash are once again venturing out into the markets in search of products that have a potentially higher yield and now that sentiment about the U.S. dollar has shifted, it seems to be about the right time to launch a fund that gives investors what they’re seeking.
The WisdomTree Dreyfus Emerging Currency Fund (CEW) is a basket of 11 emerging market currencies, giving exposure through the use of forward contracts.
The fund is equally weighted and rebalances quarterly. It’s considered actively managed in the sense that there’s no underlying index. Each currency will begin the quarter with a 9% weighting. From there, some will appreciate, others will depreciate and at the start of the next quarter, they’ll reset again back to the 9% weighting.