One of the big stories in the exchange-traded fund (ETF) industry in 2015 was the WisdomTree Europe Hedged Equity Fund (HEDJ), which led the entire ETF industry in net inflows, taking in nearly $14 billion for the year.
Most people think about tax planning just at year-end, but anytime there are significant pullbacks in the market, we think there is an opportunity to rotate into other strategies and book a loss.
In January, WisdomTree surveyed nearly 200 advisors to find out how many delegated the decision to hedge foreign currencies to an international fund manager. Nearly 7 in 10 replied that they did.
WisdomTree has suggested that the baseline allocation for international equities should be considered from a standpoint of being fully currency hedged—that is, a strategic starting point that focuses on assuming just equity market risk without a secondary currency bet or component added to returns.
Last year, one of the most important investment themes was currency hedging, particularly for euro-denominated stocks. Many investors believed the euro was going to weaken on the back of quantitative easing by the European Central Bank (ECB)—and that’s exactly what happened.