ETF Trends
ETF Trends

Just 10 months ago, the WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) celebrated joining the $1 billion in assets under management club.

That is a distant memory as HEDJ is now home to nearly $11.1 billion in assets, enough to have the fund bearing down on the Vanguard FTSE Europe ETF (NYSEArca: VGK) for the title of largest U.S.-listed Europe ETF.

HEDJ trails VGK “by just $1.2 billion after adding $8 billion since the start of the fourth quarter,” reports Joseph Ciolli for Bloomberg.

This is where things get interesting. Bloomberg notes HEDJ has $11.2 billion in AUM, but erring on the side of caution, we’ll use the number available on the WisdomTree website and round up to $11.1 billion. VGK had $11.3 billion in assets as of Jan. 31, according to Vanguard data. Vanguard releases AUM data for its ETFs on a monthly, not daily, basis.

As of Feb. 20, VGK had pulled in $427.2 million in new assets this month, according to data. Add that to the ETF’s Jan. 31 AUM figure and the number is just over $11.7 billion, meaning HEDJ is about $630 million away from wresting the crown of largest Europe ETF trading in the U.S. from VGK.

Given HEDJ’s asset-gathering acumen, the ETF could become the largest U.S.-listed Europe ETF in a matter of days. Only four ETFs added more assets than the $480.4 million gained by HEDJ over the past week. Year-to-date, investors have poured $4.62 billion into HEDJ, $1.76 billion than has gone into the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG), this year’s second-best asset-gathering ETF. [Time to Overweight Europe ETFs]

The comparison of HEDJ and VGK,although not apples-to-apples, underscores the advantages of currency hedging in a strong dollar/weak euro environment. Over the past year, HEDJ has displayed an almost perfect inverse correlation to the CurrencyShares Euro Currency Trust (NYSEArca: FXE), with the former rising 17.7% as the latter slid 17%. Conversely, VGK, which is not a dedicated Eurozone ETF as HEDJ is, fell nearly 3% over the same 12-month period. [Hedged Europe ETF Tops $10B in AUM]

As a dedicated Eurozone play, HEDJ allocates almost 51% of its combined weight to Germany and France, the region’s two largest economies. Conversely, VGK allocates over 46% of its weight to the U.K. and Switzerland, which are not Eurozone members.

WisdomTree Europe Hedged Equity Fund

Tom Lydon’s clients own shares of HEDJ and HYG.