“An important element to consider is the ultimate cost of hedging, which can be estimated as the weighted average difference in short-term interest rates relative to the United States. For IHDG, this figure is approximately 0.2%, a relatively small cost to hedge these developed international currencies,” according to Schwartz.
Importantly, IHDG allocates 12.3% of its weight to Germany, which is starting to see the positive effects of the weak euro as highlighted by last Friday’s robust economic data reports out of the Eurozone’s largest economy and the ensuing rise to a record by the benchmark DAX. [A Rush to Germany ETFs]
A combined 7% of IHDG’s weight is allocated to Sweden and Denmark, two countries that are now homes to negative interest rates.
On the dividend front, IHDG’s underlying index has a yield of 3% and the ETF’s combined 27% to British and Australian stocks is notable because those are two of the best ex-U.S. dividend growth markets.
Investors are warming to the IHDG story as the ETF has pulled in $62 million of its $83.4 million in assets under management this year.
WisdomTree International Hedged Dividend Growth Fund