WisdomTree is taking two of its most popular U.S. exchange traded funds (ETFs) to Europe to feed the growing demand for currency-hedged ETFs.
WisdomTree, a $61 billion ETF firm, will begin trading in London, Frankfurt, and Milan May 21, the Financial Times reports. Investors have been snapping up currency-hedged ETFs for protection against the swings the dollar, euro, and yen have all suffered this year because of quantitative easing. The U.S. version of the to-be-launched Japan equity fund brought in $3.2 billion in 2015, ending in April. The dollar-hedge Europe equity ETF has had $13 billion in inflows in the same time period, making it the fastest growing ETF in 2015.
WisdomTree is the third-fastest growing ETF provider in 2015 with $17.4 billion in new inflows between January and April, behind the giants of the industry BlackRock and Vanguard.
The two WisdomTree ETFs are designed to protect against the euro and yen falling against the dollar, and will underperform compared to a non-currency hedged ETF when the dollar weakens. The ETFs are also heavily reliant on export-focused companies. The funds rating provider S&P Capital IQ cautioned investors on the fund last month because of its heavy weightings in L’Oreal, Unilever, and Anheuser-Busch InBev, all of which were on the S&P sell list at the time.
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