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Friday, May 29, 2015

More Performance Chasing ...This Time in the Hedged Europe ETF ?

Currency hedged ETFs such as HEDJ have been the hot investment of the past year even earning's "ETF of the Year" for 2014.

Not surprisingly much of the money flowing in is performance chasing. So I wasn't at all surprised to read this after the dollar reversed some of its gains in the early part of of May.


Asset inflows into the two most popular ETFs of 2015, the WisdomTree Europe Hedged Equity ETF (HEDJ | B-54) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF | B-72), slowed to a trickle this month, due largely to unexpected softness in the dollar.

HEDJ has gathered only $2 million in fresh net assets so far this month, while DBEF has raked in $137 million. These flows have come after HEDJ added $13 billion in net assets in the first four months of the year and DBEF $9 billion

And as is often the case the timing seems terrible. HEDJ (chart belwo) is up 3.4% since May1 as the dollar has resumed its rally against the Euro

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