Market Insights

Jeremy Schwartz
Director of Research


Disproving the Naysayers on Currency Hedging

Recently, the naysayers on currency hedging have come out in full force, advising investors not to hedge currency risk. Some of these naysayers are with reputable firms. Even so, I believe their negativity toward currency hedging is misleading.

  • 04/27/2015 South Korea at a Crossroads

    As we have seen recently, with actions from the Bank of Japan and the European Central Bank, the preferred way to stimulate the economy these days has been through aggressive monetary easing policies, and one beneficial impact is a weaker currency. If South Korea follows in their footsteps, we think it will be positive for corporate profitability of exporters and the equity markets, but not for the currency, so we would advocate for a currency-hedged equity vehicle.

  • 03/06/2015 Engineering Gains for German Equities and Losses for the Euro

    Europe has been one of the primary risks for the global economy—with sluggish growth, over-leveraged countries and banks being prime concerns for many investors. We believe that tides are changing due to shifting policy winds among central banks. We believe that the European Central Bank's expanded asset-purchase program will continue to weaken the euro against the dollar and provide support for local equity markets.

  • 02/05/2015 Analysis of the 2014 Earnings Index Family Rebalance

    The market environment is always changing, and the rebalance process plays an important role in ensuring that an Index weights back to its fundamentals. In this piece, we have attempted to showcase how the rebalance process forces the discipline of reweighting back to the fundamentals and the beneficial impact the process has on valuation ratios.

  • 01/12/2015 Dividends: Fifth Consecutive Year of Double-Digit Growth

    The WisdomTree annual rebalance is a key element of the added value of WisdomTree’s Index methodology. We interpret another year of double-digit dividend growth as a very positive indicator of underlying market fundamentals and believe it helps provide a notable foundation for potential future gains.

  • 12/02/2014 Emerging Markets and State-Owned Enterprises

    We’ve seen growing interest in the degree of exposure to state owned enterprises (SOE) in various investment strategies. State owned enterprises are typically defined as companies that are either wholly or partially owned or operated by a government. Some investors feel government ownership can negatively impact the operational aspect of a company because government owned companies can be potentially influenced by a broader set of interests beyond generating profits for shareholders.

  • 11/12/2014 WisdomTree 2014 Annual Emerging Markets Rebalance

    Each year, the rebalancing process refreshes the constituent weights of WisdomTree Indexes, moving them back toward a measure of relative value. As is the case with any approach looking to take advantage of the relatively less-expensive part of an equity market, the larger uncertainty regards not whether the stocks are over- or undervalued, but rather how long it will take broader market participants to actually respond and start pushing up prices.

  • 09/24/2014 A Japan Strategist Roundtable Discussion: What's Next for Japan?

    My trip to Japan reinforced my views that Japan should be one of the most preferred destinations for global investment capital over the coming years. Japanese valuations have come down as Japanese earnings have grown more than stock prices. There is increased coordination from the government and central bank to reignite inflation and end the deflationary slump once and for all.

  • 09/17/2014 A Second Look under the Hood of International Smart Beta

    A common perception is that smart beta indexes always involve a small-cap bias in their construction. This is not true for WisdomTree’s broad-based and large-cap Indexes, which often have a larger-cap bias relative to traditional market cap-weighted indexes. We quantified in this piece the extent of that large-cap bias. We also addressed the comment that smart beta indexes inherently are value-tilted strategies.