Given that HEDJ does not always move in lockstep with the ETF’s country and sector weights take on some added significance in advance of and after the ECB meeting. Markets would like to see the ECB follow the Federal Reserve and Bank of England by either announcing a time line for future rate increases or tying such action to marquee economic data, such as unemployment rates.
Draghi’s failure to do that today could spook investors in the near-term, but that could create a buying opportunity in HEDJ. France is the ETF’s largest country weight at 24.7%, but mix of conservative and Eurozone economies in the next three country allocations is something to note. Germany and the Netherlands, a pleasant surprise among single-country Europe ETFs in recent months, combine for over 42% of the fund’s weight. Spain is next at nearly 15%.
Even if riskier sectors like financial services lead a legitimate rally in European stocks, HEDJ’s exposure to export-driven sectors position the ETF to benefit from an ongoing global recovery. Industrials, staples and discretionary names combine for 59% of the fund’s weight.
WisdomTree Europe Hedged Equity Fund
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of DXJ.