WisdomTree International Hedged Equity Fund (HEDJ), a “fund of funds”, launched today (December 31, 2009). It is designed to provide exposure to equity securities in Europe, Far East Asia and Australasia, while at the same time hedging exposure to fluctuations between the value of the U.S. dollar and selected non-U.S. currencies in these regions. Therefore, it is currency hedged, not equity hedged.
HEDJ invests its assets primarily in other WisdomTree ETFs that, in turn, invest in equity securities in Europe, Far East Asia and Australasia. WisdomTree DEFA Fund (DWM) is an ETF that meets the objectives of the equity portion of this fund. However, HEDJ’s underlying ETFs are the WisdomTree Europe Total Dividend Fund (DEB), Japan Total Dividend Fund (DXJ), and Pacific ex-Japan Total Dividend Fund (DND). This will presumably allow WisdomTree to more finely tune the regional exposure.
HEDJ intends to enter into forward currency contracts or futures contracts designed to offset the Fund’s exposure to non-U.S. currencies. This should provide higher returns than an equivalent non-currency hedged investment when the U.S. dollar is going up in value relative to foreign currencies and lower returns when the U.S. dollar is falling.
The expense ratio is 0.58% for HEDJ and 0.48% on the underlying funds. When added together, they yield a 1.06% gross expense ratio. However, WisdomTree Asset Management has contractually agreed to waive a portion of its management fees equal to the underlying fund fees (also known as Acquired Fund Fees) for so long as the HEDJ invests in the underlying funds. The result is a 0.58% net expense ratio.
Information on HEDJ has not been added to the WisdomTree website as of this writing but should eventually be listed in the ETF Index. Prospectus.
Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.