In an era where exchange traded funds (ETFs) continue to draw appeal, ETF providers are in full swing and introducing new products at the blink of an eye.
Most recently, WisdomTree announced its newest ETF, the WisdomTree International Hedged Equity Fund (HEDJ). This ETF is designed to give exposure to international markets, particularly Europe, Asia and Australia, while neutralizing currency movements in these regions versus the U.S. dollar (More Ways To Play International Markets).
What’s unique about HEDJ is that it is a fund of ETFs, meaning that its holdings are comprised of other ETFs. The new ETF invests primarily in the WisdomTree Europe Total Dividend Fund (DEB), the Japan Total Dividend Fund (DXJ) and the Pacific ex-Japan Total Dividend Fund (DND). From a sector perspective, financials, industrials and energy are the top three sectors tracked by HEDJ. In regards to country exposure, the United Kingdom and France make up over 33% of its total asset base.
According to WisdomTree, HEDJ, which carries an expense ratio of 0.58%, gives investors the ability to diversify by gaining exposure to international markets without having to worry about appreciation or depreciation of currencies. The ETF achieves this by using forward contracts to neutralize the movement of the currency in direct proportion to the country weights of the equities in the fund. This will be beneficial if the U.S. dollar gains strength against other currencies (Possible U.S. Dollar Plays).
