Daily ETF Watch: New Hedged Japan ETFs

WisdomTree is rolling out five more hedged Japan-focused ETFs.

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Reviewed by: Hung Tran
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Edited by: Hung Tran

WisdomTree is rolling out five more hedged Japan-focused ETFs.

The firm behind the ETF of the Year, the $11.9 billion WisdomTree Japan Hedged Equity Fund (DXJ | B-53), on Tuesday is launching five more currency-hedged Japan-focused ETFs focused on sectors to capitalize on Japan’s growth story, according to an NYSE communique.

The success of DXJ, which gathered $9.74 billion last year, and the inclination to offer more currency-hedged ETFs, is related to Prime Minister Shinzo Abe’s economic growth stimulus policies. Abe’s reforms, dubbed “Abenomics,” involve a three-pronged attack plan of massive fiscal stimulus, more aggressive monetary easing from the Bank of Japan, and infrastructure spending to weaken the yen, thus making Japanese exports cheaper than their competitors’.

WisdomTree is hoping its latest proposed sector-focused offerings will capture investor interest the way DXJ has. The new funds, and their proposed tickers, include the:

However, the Nikkei 225 Index, which soared upward of 57 percent last year, making Japan’s the best-performing stock market in the world, has corrected downward so far in 2014. Year-to-date, the index is down some 7.5 percent.

In turn, DXJ has struggled to regain its mojo. Year-to-date, the ETF is down 6.7 percent, after climbing 41.4 percent versus 26.0 percent for the nonhedged iShares MSCI Japan ETF (EWJ | B-97) in 2013, the difference being the shifts in the dollar-yen cross.

And with Abenomics in full effect in Japan, is WisdomTree a little late to the party with these offerings now?

Maybe not, according to Dennis Hudcheck, an ETF analyst at ETF.com.

“When I first saw the filings last year, my initial concern was that by the time these funds launch, the underlying securities would have already surged,” Hudachek said.

 

“Many financials and real estate firms have in fact surged since the advent of Abenomics, but 2014 hasn't been too nice to these sectors. With the Nippon Individual Savings Account program picking up steam and the Bank of Japan possibly getting ready to stimulate further, the launch of these ETFs may end up being timely after all,” he added.

ETN Shuttering

On April 4, Barclays Bank PLC pulled the plug on its Barclays ETN+ Short B Leveraged Exchange Traded Notes (BXDB) as a result of a stop-loss termination event that occurred on April 4, according to a statement from the bank.

A stop-loss termination happens when the intraday indicative value of the security falls to $10 or lower before the note matures. In this case, BXDB hit the redemption threshold at 9:33 a.m. EST last Friday, according to the bank.

Therefore, holders of BXDB will receive a cash payment equal to the stop-loss redemption value on April 11.

BXDB launched in November 2009 and had a maturity date of Nov. 20, 2014, and currently manages just $1.6 million.

 

Hung Tran is a former staff writer for etf.com.