Is WisdomTree Europe Hedged Equity ETF (HEDJ) a Strong ETF Right Now?
Smart Beta ETF report for HEDJ
Making its debut on 01/04/2010, smart beta exchange traded fund WisdomTree Europe Hedged Equity ETF (HEDJ) provides investors broad exposure to the European Equity ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $2.08 billion, this makes it one of the larger ETFs in the European Equity ETFs. HEDJ is managed by Wisdomtree. HEDJ seeks to match the performance of the WisdomTree Europe Hedged Equity Index before fees and expenses.
The WisdomTree Europe Hedged Equity Index is designed to provide exposure to European equities while at the same time neutralizing exposure to fluctuations between the Euro and the U.S. dollar. In this sense, the Index hedges against fluctuations in the relative value of the Euro against the U.S. dollar.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.58% for HEDJ, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.06%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Linde Plc (LIN) accounts for about 6.55% of total assets, followed by Unilever Plc (UNAA) and Asml Holding Nv (ASML).
Its top 10 holdings account for approximately 43.38% of HEDJ's total assets under management.
Performance and Risk
The ETF return is roughly 16.88% so far this year and was up about 24.83% in the last one year (as of 10/21/2021). In the past 52-week period, it has traded between $58.11 and $80.65.
The ETF has a beta of 0.87 and standard deviation of 22.98% for the trailing three-year period, making it a medium risk choice in the space. With about 122 holdings, it effectively diversifies company-specific risk.
WisdomTree Europe Hedged Equity ETF is a reasonable option for investors seeking to outperform the European Equity ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
JPMorgan BetaBuilders Europe ETF (BBEU) tracks MORNINGSTAR DEV EUROPE TARGET MKT EXP ID and the Vanguard FTSE Europe ETF (VGK) tracks FTSE Developed Europe All Cap Index. JPMorgan BetaBuilders Europe ETF has $9.06 billion in assets, Vanguard FTSE Europe ETF has $21.35 billion. BBEU has an expense ratio of 0.09% and VGK charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity ETFs.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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WisdomTree Europe Hedged Equity ETF (HEDJ): ETF Research Reports
ASML Holding N.V. (ASML): Free Stock Analysis Report
Linde plc (LIN): Free Stock Analysis Report
Vanguard FTSE Europe ETF (VGK): ETF Research Reports
JPMorgan BetaBuilders Europe ETF (BBEU): ETF Research Reports
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