“With performance like that, DXJ is bound to draw assets from those chasing performance. If you’re in that group, be sure to understand that the currency hedge can taketh away too,” he added.
In the fourth quarter, WisdomTree’s (NasdaqGM: WETF) international equity ETFs brought in $620 million with DXJ responsible for the “lion’s share,” said CEO Jonathan Steinberg during the firm’s Feb. 1 earnings call.
In January, WisdomTree generated $2 billion of inflows, of which $1.1 billion came in through DXJ, which launched in 2006. The ETF was subsequently altered to hedge its currency exposure and recently shifted its strategy to focus more on Japanese exporters. [The Perfect ETF for Higher Japanese Stocks and a Weaker Yen]
“In December, we saw that there was political movement that would be extraordinarily constructive, and we started, from a research side, very aggressively updating our clients as well as the media to the shift within Japan and how well it positioned DXJ for those changes,” Steinberg said. “We tried to just max it out so that the world was aware of this unique exposure in the world of ETFs, and it now takes on a life of its own.”
“Folks are looking for the Japanese exposure, but they are also looking to hedge the impact of the yen,” added Luciano Siracusano, WisdomTree chief investment strategist, on the firm’s fourth-quarter earnings conference call.
WisdomTree Japan Hedged Equity Fund
Full disclosure: Tom Lydon’s clients own DXJ.