A smart beta exchange traded fund, the WisdomTree Europe Hedged Equity ETF (HEDJ) debuted on 01/04/2010, and offers broad exposure to the European Equity ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Wisdomtree, and has been able to amass over $1.52 billion, which makes it one of the larger ETFs in the European Equity ETFs. This particular fund 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.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.58%.
It has a 12-month trailing dividend yield of 2.93%.
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.
Taking into account individual holdings, Banco Bilbao Vizcaya Argentaria Sa (BBVA) accounts for about 5.38% of the fund's total assets, followed by Deutsche Telekom Ag (DTE) and Lvmh Moet Hennessy Louis Vuitton Se (MC).
The top 10 holdings account for about 40.56% of total assets under management.
Performance and Risk
Year-to-date, the WisdomTree Europe Hedged Equity ETF has added roughly 7.13% so far, and it's up approximately 8.10% over the last 12 months (as of 12/10/2024). HEDJ has traded between $41.58 and $48.49 in this past 52-week period.
The fund has a beta of 0.88 and standard deviation of 16.51% for the trailing three-year period, which makes HEDJ a medium risk choice in this particular space. With about 158 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree Europe Hedged Equity ETF is not a suitable option for investors seeking to outperform the European Equity ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares MSCI Eurozone ETF (EZU) tracks MSCI EMU Index and the Vanguard FTSE Europe ETF (VGK) tracks FTSE Developed Europe All Cap Index. IShares MSCI Eurozone ETF has $6.83 billion in assets, Vanguard FTSE Europe ETF has $17.90 billion. EZU has an expense ratio of 0.51% and VGK charges 0.09%.
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.
Bottom Line
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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Get it free >>WisdomTree Europe Hedged Equity ETF (HEDJ): ETF Research Reports
DTE Energy Company (DTE) : Free Stock Analysis Report
Banco Bilbao Viscaya Argentaria S.A. (BBVA) : Free Stock Analysis Report
Moelis & Company (MC) : Free Stock Analysis Report
iShares MSCI Eurozone ETF (EZU): ETF Research Reports
Vanguard FTSE Europe ETF (VGK): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
