However, asset flows have been good to WETF not only in recent quarters but recent years thanks to the mega popularity of “Currency Hedged” ETFs and the growing institutional and retail usage of such products. Every issuer that operates in that space, for it is not only WisdomTree but also iShares and Deutsche Bank specifically to name the larger players in that particular ETF niche, that are reliant on “Rising U.S. Dollar concerns”, which would of course equate to foreign currency weakness against the U.S. Dollar, and thus likely continue to spur interest in Currency Hedged Equity products.
Today is no exception, as we see the U.S. Dollar rallying more than 1.2% in early trading after a prolonged slump since mid-April. Our thought process is pretty simple, and that is, when the Dollar falls in a sustained manner, Currency Hedged Equity products are perhaps “not as necessary” or potentially viewed that way for those investors whom would rather spurn the hedge, but when the opposite scenario occurs, like today with a huge gap up in the U.S. Dollar versus global currencies, investors may continue to scoop up such ETF products for fear of the sharp reversal sustaining itself once again (Reference UUP (PowerShares DB U.S. Dollar Index Bullish, Expense Ratio 0.80%) traded as high as $26.50 in mid-March but is struggling with a low $25 handle even after
today’s move up).
WisdomTree
For more information on Street One ETF market commentary and ETF trade execution/liquidity services, contact Paul Weisbruch at [email protected]
Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.