ETF Trends
ETF Trends

WisdomTree expanded its line of dynamic currency hedged exchange traded funds with an international quality dividend growth strategy for yield-minded investors who are wary of foreign exchange fluctuations.

WisdomTree has rolled out the WisdomTree Dynamic Currency Hedged International Quality Dividend Growth Fund (BATS: DHDG). DHDG has a net expense ratio of 0.48%.

DHDG will try to reflect the performance of the WisdomTree Dynamic Currency Hedged International Quality Dividend Growth Index, which is comprised of developed market, ex- U.S. and Canada, dividend growing companies with the best combined rank of growth and quality factors while diminishing exposure to currency risk with a fluctuating hedge ratio ranging from 0% to 100% on a monthly basis.

The growth factor is based on long-term earnings growth expectations. The quality factor is based on three-year historical averages for return on equity and return on assets. Lastly, companies are weighted based on annual cash dividends paid.

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Unlike the more popular currency hedged ETF strategies, DHDG, will utilize a type of dynamic currency hedged methodology that will hedge currency fluctuations in the relative value of the foreign currency against the U.S. dollar, ranging from 0% to 100% hedge based on interest rate differentials, valuations and relative price momentum on the foreign currencies, compared to the USD.

“Investors often take on too much currency risk when they invest overseas. For those who do not want to make the timing decision themselves, DHDG will help dynamically adjust currency-hedge ratios based on a data-driven, transparent process. Adopting a dynamic approach with WisdomTree moves investors away from subjective calls and into a disciplined, factor-based approach to currency hedging. We believe our factors – carry, value and momentum – have potential to outperform both hedged and unhedged strategies over time by rotating currency hedges with their cycles,” Jeremy Schwartz, WisdomTree Director of Research, said in a press release.

Top holdings include Unilever 5.8%, British American Tobacco 5.3%, Roche Holding 5.3%, Roche Holding 5.3%, LVMH Moet Hennessy Louis Vuitton 3.0% and Reckitt Benckiser Group 3.0%.

Sector weights include consumer discretionary 20.4%, industrials 19.6%, consumer staples 17.8%, health care 17.5%, information technology 8.7%, financials 4.8%, real estate 4.4%, materials 3.6% and utilities 2.5%.

Country weights include U.K. 18.9%, Switzerland 12.1%, Netherlands 11.0%, Japan 10.4%, France 6.7%, Germany 6.1%, Sweden 5.7%, Spain 5.6%, Australia 5.5%, Hong Kong 5.4%, Denmark 3.8%, Finland 2.4%, Italy 1.4%, Norway 1.4%, Singapore 1.4%, Portugal 0.6%, Belgium 0.6%, New Zealand 0.3%, Ireland 0.3%, China 0.2% and Austria 0.1%.

For more information on new fund products, visit our new ETFs category.