HEDJ features exposure to 10 Eurozone nations, with Germany, France and Spain, three of the region’s four largest economies; looming large at roughly 70% of the ETF’s combined weight.
Cementing HEDJ’s status as the right Europe ETF for the current environment is an index construction that emphasizes exposure to dividend-paying exporters. Translation: HEDJ investors get added leverage to the companies that stand to benefit most from a weak euro with the advantage of a dividend kicker. HEDJ’s dividend bonus is arguably under-appreciated. The ETF’s distribution yield is almost 4.7%, according to WisdomTree data, compared to a trailing 12-month yield of just over 4% for VGK.
The dividend advantage should be appreciated because European dividends are, finally, once again growing. “European companies paid out $153.4 billion in the second quarter, up 18.2 percent year-on-year and the best performance on a constant currency basis in at least five years,” Reuters reported, citing Henderson Global Investors. Prior to that data being released last month, it was known that ex-U.K., European dividends have risen just 8% since 2009, indicating the continent has the potential to deliver robust payout growth going forward. [European Dividends on the Rise]
Investors have clearly warmed to the HEDJ story. The ETF topped $1 billion in assets under management in April, but entered Thursday with nearly $2.4 billion in AUM.
HEDJ vs. VGK
Chart Courtesy: ETF Replay