Is WisdomTree Europe Hedged Equity ETF (HEDJ) a Strong ETF Right Now?
Smart Beta ETF report for HEDJ
The WisdomTree Europe Hedged Equity ETF (HEDJ) made its debut on 01/04/2010, and is a smart beta exchange traded fund that provides 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $2.16 billion, making it one of the larger ETFs in the European Equity ETFs. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree Europe Hedged Equity Index.
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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.58% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.52%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Linde Plc (LIN) accounts for about 7.10% of the fund's total assets, followed by Asml Holding Nv (ASML) and Unilever Plc (UNAA).
The top 10 holdings account for about 44.2% of total assets under management.
Performance and Risk
The ETF return is roughly 21.29% and is up about 23.20% so far this year and in the past one year (as of 12/24/2021), respectively. HEDJ has traded between $66.23 and $82.19 during this last 52-week period.
The fund has a beta of 0.88 and standard deviation of 22.87% for the trailing three-year period, which makes HEDJ a medium risk choice in this particular space. With about 107 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 $9.54 billion in assets, Vanguard FTSE Europe ETF has $21.77 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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