Rekindled Interest in Currency Hedged Equity ETFs

Investing

Published: October 22, 2015 2:10 pm

Last Updated: April 6, 2020 5:51 pm

The world of wildly fluctuating currencies and the wave of global quantitative easing, many U.S. investors wanting international exposure have decided to turn to hedged equity market exchange traded funds (ETFs). These so-called hedged ETFs take all or most of the currency risk out of the equation. They simply trade in dollars and track the raw underlying equity market indexes on which they are based.

Now that Mario Draghi came out and said he wants more inflation and that the European Central Bank will re-evaluate its economic stimulus at the next meeting, most investors are seeing a massive interest in stocks again. The way to play the international market ETFs under a period of quantitative easing is magnified through hedged ETFs.

Again, this takes the risk of a rising dollar, or a falling euro or yen, out of the equation. Otherwise the raw market gains get eaten up by currency devaluation.

WisdomTree Europe Hedged Equity ETF (NYSEMKT: HEDJ) was last seen up 3.7% at $59.75. The 4.7 million shares average was already up at more than 3.5 million shares. This hedged euro-stock ETF has a 52-week trading range of $52.45 to $68.72.

WisdomTree Germany Hedged Equity ETF (NYSEMKT: DXGE) was last seen up 3.3% at $27.57, and the average volume of 152,000 was already close to being hit. Its 52-week range is $24.03 to $32.56.

WisdomTree Japan Hedged Equity ETF (NYSEMKT: DXJ) was last seen up 2.3% at $53.67, versus a 52-week range of $45.68 to $60.59. Its share volume of 4 million is still well under the average daily volume of over 6.5 million shares.

The undisputed winner of the hedged ETF trend is of course WisdomTree Investments Inc. (NASDAQ: WETF). This fund and ETF management company was last seen up 9% at $17.84, versus a 52-week range of $10.93 to $26.23. The company has a $2.5 billion market cap and manages approximately $57.5 billion in assets under management globally.

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