London is a major financial center within Europe so, understandably, many of the world's leading companies list their stocks there—even if they are physically headquartered elsewhere. In our opinion, these companies can be extremely attractive investments—but is the British pound? DXPS, the WisdomTree United Kingdom Hedged Equity Fund, seeks a way to capitalize on the growth potential of leading global companies, while hedging exposure to the British pound.
Consider that removing—or hedging—the currency exposure to the British pound over the past 10 years could have reduced volatility1 for the MSCI United Kingdom Index significantly:
Sources: MSCI, Zephyr, StyleADVISOR. Past performance is not indicative of future
results. You cannot invest directly in an index.
*Equity: Volatility of the equity prices denominated in their local currency, in
this case the British pound.
**Currency: Incremental volatility added to the equity due to changes in the value
of the British pound relative to the U.S. dollar.
***Currency + Equity: Volatility of the combination of both the local equity prices
denominated in local currency as well as that of the British pound relative to the
U.S. dollar.
1 Volatility is measured by standard deviation which is the degree to
which the Index's returns have fluctuated above or below its mean. A high number
indicated a higher volatility.
Not only are many of the world's leading companies—and brands you know—headquartered in Europe, but they are truly global companies that generate the bulk of their revenue from exporting to countries outside Europe. In fact, one of greatest challenges with Europe may not be its equity markets, but the euro itself. WisdomTree Europe Hedge Equity Fund, HEDJ, offers you a way to access the growth potential of these global leaders while hedging exposure to the euro.
Sources: S&P, WisdomTree, Bloomberg, Holdings subject to change.
South Korea is a vibrant economy that, in many ways, finds itself on the cusp of being considered a developed market, providing cutting-edge technologies and automobiles from companies you know and trust. In fact, as of December 31, 2012, almost 60% of South Korea's gross domestic product (GDP)[1] came from exports[2]. Additionally, at 15.6% as of June 30, 2014[3], South Korea is the second-largest country exposure by market capitalization[4] in the MSCI Emerging Markets Index.
WisdomTree Korea Hedged Equity Fund (DXKW) can offer investors a way to capitalize on the growth potential of South Korea's exporters while hedging[5] exposure to the Korean won. We believe that hedging the won may help reduce the investment volatility[6]. Consider that, over the past 10 years, the Korean won added considerably more volatility to the local equity market (MSCI Korea Local Currency Index):
Sources: WisdomTree, MSCI. Past performance is not indicative of future results.
You cannot invest directly in an index. Index performance does not represent actual
fund or portfolio performance. A fund or portfolio may differ significantly from
the securities included in the index. Index performance assumes reinvestment of
dividends but does not reflect any management fees, transaction costs or other expenses
that would be incurred by a portfolio or fund, or brokerage commissions on transactions
in fund shares. Such fees, expenses and commissions could reduce returns.
* Equity: Volatility of the equity prices denominated in their local currency, in
this case the Korean won.
** Currency: Incremental volatility added to the equity due to changes in the value
of the Korean won relative to the U.S. dollar.
*** Currency + Equity: Volatility of the combination of both the local equity prices
denominated in local currency as well as that of the Korean won relative to the
U.S. dollar.
MSCI Emerging Markets Index: a broad market cap-weighted Index showing performance
of equities across 23 emerging market countries defined as "emerging markets" by
MSCI.
MSCI South Korea Local Currency Index: A free float-adjusted market capitalization-weighted
equity index designed to measure the performance of the South Korean equity market,
with performance measured in terms of the Korean won.
[1]Gross Domestic Product (GDP): The sum total of all goods and services
produced across an economy.
[2]Source: World Bank.
[3]Source: MSCI.
[4]Market capitalization: Market cap = share prices x number of shares
outstanding.
[5]Hedging: Apply strategies meant to mitigate the impact of currency
movements on equity returns.
[6]Volatility: A measure of the dispersion of actual returns around a
particular average level.
Germany is one of the engines of European growth and has been a resilient force throughout the debt crisis. In our opinion, Germany's export based economy looks well positioned to benefit from a broader recovery. WisdomTree Germany Hedged Equity Fund (DXGE) offers you a way to capitalize on the growth potential of these tremendous exporters while hedging out the effects of the euro, helping you to reduce volatility and potentially boosting your returns. Consider that removing - or hedging - the currency exposure to the euro over the past 10 years could have reduced volatility for the MSCI Germany Index by:
+4.0% over 1
year
+5.5% per year
over 3 years
+6.5% per year
over 5 years
+5.7% per year
over 10 years
Sources: WisdomTree, MSCI. Past performance is not indicative of future results.
You cannot invest directly in an index. Index performance does not represent actual
fund or portfolio performance. A fund or portfolio may differ significantly from
the securities included in the index. Index performance assumes reinvestment of
dividends but does not reflect any management fees, transaction costs or other expenses
that would be incurred by a portfolio or fund, or brokerage commissions on transactions
in fund shares. Such fees, expenses and commissions could reduce returns.
* Equity: Volatility of the equity prices denominated in their local currency, in
this case the euro.
** Currency: Incremental volatility added to the equity due to changes in the value
of the euro relative to the U.S. dollar.
*** Currency + Equity: Volatility of the combination of both the local equity prices
denominated in local currency as well as that of the euro relative to the U.S. dollar.
1 Volatility is measured by standard deviation which is the degree to
which the Index's returns have fluctuated above or below its mean. A high number
indicated a higher volatility.
2 MSCI Germany Index: Index weighted by float-adjusted market capitalization
designed to measure the performance of the German equity market.
The Land of the Rising Sun is home to what we believe are exciting investment opportunities. Thus far, unprecedented monetary easing by the Bank of Japan has contributed to an environment of yen depreciation. Japanese firms, many of which are global exporters, have enjoyed increased competitiveness as a result. By hedging its exposure to the yen, the WisdomTree Japan Hedged Equity Fund (DXJ) offers you a way to more fully access the return potential of Japanese equities in a weakening yen environment.
Sources: Bloomberg, WisdomTree.
The period from 11/30/2012 to 6/30/2014 was selected to indicate the relationship
between the cumulative performance(be it positive or negative) of the yen spot rate
(vs. USD)1 and two Indexes2 of Japansese equity performance.
The start date was chosen to coincide with Abenomics.
Past performance is not indicative of future results. You cannot invest directly
in an index. Index performance does not represent actual fund or portfolio performance.
A fund or portfolio may differ significantly from the securities included in the
index. Index performance assumes reinvestment of dividends but does not reflect
any management fees, transactions costs or other expenses that would be incurred
by a portfolio or fund, or brokerage commissions on transactions in fund shares.
Such fees, expenses and commissions could reduce returns.
Shinzo Abe's election and his "Abenomics" policies have jump started growth expectations for Japan and have been a very positive catalyst for Japan's equity markets, while negatively impacting its currency1. In DXJ, we focused on the exporters of Japan who we believe stand to benefit from a weak yen environment. But the export nature of Japan is not the entire Japan story. Mr. Abe has a goal of spurring local economic growth. And Japanese small caps are more plugged into the local demand and revenue base than their large cap, global peers. Hedging the yen can be critical to capitalizing on the market's equity returns during a declining yen environment.2 DXJS, the WisdomTree Japan Hedged SmallCap Equity Fund, seeks to capture the potential growth of small Japanese companies, while hedging out the effects of the yen.
Sources: WisdomTree, Bloomberg, S&P as of 5/31/2014. Past performance is not indicative of future results. You cannot invest directly in an index.
1 Japan's equity markets refer to the TOPIX Index universe.
2 Hedging: Applying strategies meant to mitigate the impact of currency
movements on equity returns.