The currencies within the fund are:
- Brazilian real
- Mexican peso
- Chilean peso
- Israel shekel
- Turkish lira
- Polish zloty
- Chinese yuan
- South Korean won
- Taiwan dollar
- Indian rupee
- South African rand
“We put a premium on liquidity and there was a deep enough pool to make the fund work, so that’s how we settled on those currencies,” Jeremy Schwartz, WisdomTree’s director of research, notes. He also points out that they wanted to be sure there was no overlap between currencies with a high correlation to one another.
One advantage of owning a basket of emerging market currencies, Siracusano says, is that investors don’t have to take on the equity risk of owning emerging market stocks. “Currencies have a different profile from a volatility perspective.”
This fund is the first of its kind. The closest ETF to it is the PowerShares DB G10 Currency Harvest (DBV), which is a basket of currencies from developed nations.
Siracusano notes that emerging markets have moved in a more positive direction in recent months.
“They’re all pretty much heading in the right direction. We think they’re starting to head back to the fundamentals. Places like China and India have had GDP growth, while economies in the developed world have contracted.”
CEW has a 0.55% expense ratio.