European Hedged Equity ETFs: What HEDJ Offers You
Hedged Equity Funds: Must-Knows for Foreign Investment
What does HEDJ offer?
The WisdomTree Europe Hedged Equity ETF (HEDJ) provides exposure to the European equity market and hedges the risk of fluctuations between the US dollar and the euro. HEDJ tracks the performance of the WisdomTree Europe Hedged Equity Index.
According to the WisdomTree website, HEDJ invests in the stocks of European companies whose revenues are significantly export-driven. Compared to an equivalent currency-unhedged investment, the index and the ETF give higher returns when the value of the US dollar rises relative to the value of the euro. The funds give lower returns when the US dollar falls relative to the euro. HEDJ’s top holdings include Anheuser-Busch Inbev (BUD), Novartis (NVS), and HSBC Holdings (HSBC).
Similarly, the Deutsche X-trackers MSCI Europe Hedged Equity ETF (DBEU) replicates the performance of the MSCI Europe US Dollar Hedged Index before fees and expenses.
The index and the ETF provide exposure to the equity securities in 15 developed European stock markets:
Austria
Belgium
Denmark
Finland
France
Germany
Ireland
Italy
the Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
the United Kingdom
DBEU hedges fluctuations between the value of the US dollar and selected non-US currencies. The top holdings include Nestle (NSRGF), Novartis (NVS), and HSBC Holdings (HSBC).
Both HEDJ and DBEU invest in European equities. Their assets under management are $21,873.3 million and $2,837.3 million, respectively. The expense ratio is 0.58% for HEDJ and 0.45% for DBEU. An expense ratio is the operating cost of the fund per $1,000 invested. Here, it’s $58 per $1,000 invested for HEDJ. The ratio is calculated annually. The lower the ratio, the better the fund’s management of the operating cost.
So, how do these funds compare against each other? Let’s take a look in the next part of this series.
Browse this series on Market Realist:
