Different Approaches to Europe ETFs

Investors should not buy HEDJ solely on the expectation that ECB easing will depress the euro. There are no guarantees the ECB will even ease let alone are there assurances the forex will suppress the euro for an extended period. On that note, it must be remembered that HEDJ is up 14.1% over the past year, an environment in which the euro has been stout.

Importantly, HEDJ allocates almost 41% of its combine weight to France and Spain, two European equity markets that are still nowhere close to their pre-crisis highs, implying HEDJ has room to run even though it is flirting with its own all-time highs. [Big Upside for France ETF]

HEDJ represents a lower volatility avenue to Europe, something the ETF does not get enough credit for. The ETF’s underlying index has a beta of 0.7 and annualized volatility of just 10.5% against the MSCI EAFE Index, according to WisdomTree data.

WisdomTree Europe Hedged Equity Fund