However, the issue for currency hedged ETFs, at least in the here and now, is speculation that the dollar rally is going to cool because the Federal Reserve will not raise interest rates next month as so many investors previously expected.
“Like many asset managers, WETF’s stock is down sharply [this month], however four factors shift our thinking. First, we believe the flow story is deteriorating and lead indicators are softening rapidly. Second, there is building margin pressures given rapid AUM decline and elevated spending, on top of adverse fee rate shift. Third, we believe the multiple could compress. Fourth, management selling has stepped up,” said Citi’s Katz in an excerpt of his note posted by Barron’s.
Shares of WisdomTree have tumbled 21.4% over the past month, but those losses could be erased if the dollar rallies.