This is one reason why WisdomTree believes one may want to have a high conviction in the euro, yen and British pound’s direction to fully take on this currency risk in a traditional ETF that does not hedge the currency.
Illustrating the Difference Between High- and Low-Cost Currency Hedging
Conclusion
The bottom line is that WisdomTree ultimately believes currency hedging is gaining prominence and importance—as was particularly evident with Japan in 2013. But Japan is not a unique application. WisdomTree believes that currency-hedged strategies should have broad appeal, in Europe today based on monetary policy directions of the ECB, but also more strategically from a long-term standpoint in broader-based developed world exposures.
1WisdomTree launched the WisdomTree Europe Hedged Equity Fund on 12/31/09, the first U.S.-listed currency-hedged equity ETF.
2Refers to the Federal Funds Rate.
3Source: Bloomberg, as of 3/31/14. Refers specifically to the SELIC rate, which was the rate used to implement this policy action.
4Source: Bloomberg, as of 3/31/14.
5Source: Bloomberg, as of 3/31/14. For both currency weights within the MSCI EAFE Index and the cost to hedge the respective currencies.
6Source: Bloomberg, as of 3/31/14.
Important Risks Related to this Article
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