More Currency Hedged ETFs From Fast-Growing WisdomTree
Currency hedging drove WisdomTree ETFs’ record performance in the first quarter. So the asset manager is giving investors more currency hedged products to choose from. WisdomTree’s exchange traded funds absorbed $ 13.5 billion in Q1 — nearly a quarter of the $ 56.7 billion that flowed into the U.S. ETF industry as a whole. The firm’s assets reached $ 55.8 billion, up 42% from the end of 2014.
Investors poured $ 10.3 billion into WisdomTree Europe Hedged Equity (ARCA:HEDJ) alone in Q1.
“The growth rate we’re delivering is by far the fastest in the country,” CEO and President Jonathan Steinberg told IBD after his company’s Q1 earnings call. “It continues to be on the back of our currency hedged products.”
As the dollar rose in Q1, investors used HEDJ to mitigate currency risk while investing in the eurozone. The region’s equities benefited from a massive stimulus program launched by the European Central Bank (ECB) in January.
HEDJ crossed $ 10 billion in assets in February. It now has $ 19.68 billion, up 250% from the end of 2014.
Against that backdrop, WisdomTree is expanding its currency hedged lineup. It launched Europe Hedged SmallCap Equity (ARCA:EUSC) on March 4. Japan Hedged Dividend Growth Fund (ARCA:JHDG) launched April 9.
EUSC offers exposure to an asset class that could gain most if the ECB’s quantitative easing program reignites growth in Europe.
“Typically, small caps are often tied to local economic prospects, more so than globally oriented large caps,” Jeremy Schwartz, WisdomTree director of research, said at the time of the ETF’s debut.
EUSC’s grown to $ 196.63 million in assets. Steinberg describes it as one of his firm’s most successful launches ever.
“Investors are going to want a hedged version of almost everything they have that is unhedged,” he said. “We want to give investors tools to put together these very exotic portfolios of funds.”
WisdomTree has been the biggest beneficiary of the hot currency hedging trend, says Neena Mishra, director of ETF research at Zacks Investment Research.
“They were the first to market currency hedged products and competitors are still trying to catch up,” Mishra said. However, a slowing economy and weakening dollar could check the flood of new money into these products, she added.
WisdomTree’s (NASDAQ:WETF) stock rallied 5% on the stock market today, to 19.92.