A resource for debunking the investments myths peddled by the financial press and Wall Street hype and presenting rational,sensible investing approaches based on sound research and academic findings.
This blog is maintained by Lawrence Weinman MBA an independent Registered Investment Advisor www.lweinmanadvisor1.com
Bloomberg on Hedging Currency Risk in European Stocks
Bloomberg.com personal finance blog had this to say today about HEDJ the currency hedged European stock ETF I discussed yesterday
Easing Up in Europe
The European Central Bank recently announced interest rate cuts and a program to buy asset-backed securities and covered bonds. If that sounds familiar, that's because it's reminiscent of the Federal Reserve's actions in the U.S. and also of "Abenomics," the strategy Prime Minister Shinzo Abe has taken to revive Japan's economy. It's yet another central bank printing money to weaken its currency and stimulate exports and its economy.
That puts the WisdomTree Europe Hedged Equity Fund (HEDJ) in the catbird seat. It tracks the top exporting companies in euro zone countries and hedges against moves in the relative value of the euro against the U.S. dollar. That combination gives investors pure exposure to the performance of local stocks, with a bit less volatility from currency fluctuations. So far this year, the fund is up 5 percent, while the non-hedged European ETFs are flat.
HEDJ follows in the footsteps of another WisdomTree ETF, the Japan Hedged Equity Fund (DXJ). That ETF soaked up $10 billion in new cash from investors as Abenomics unfolded in Japan. About $1.8 billion has flowed into HEDJ so far this year, the most of any European ETF. That quadrupled its size to $2.5 billion. HEDJ charges 0.58 percent of assets a year.