Currency-Hedged ‘HEDJ’ Wins ETF Of The Year

March 19, 2015

[Editor’s Note: Please see the award-selection methodology at the end of this article.]

 

The WisdomTree Europe Hedged Equity Fund (HEDJ) was named the ETF of the Year at the second annual ETF.com Awards held tonight in New York—in no small part because it has been more popular than competing equity strategies designed to protect U.S. investors from the strength of the dollar.

ETF.com, the 15-year-old news, views and financial data company focused exclusively on exchange-traded funds, also honored important individuals like Lee Kranefuss, who built iShares, the world’s largest ETF company; and the fund sponsor First Trust.

The annual awards ceremony, which took place at Chelsea Piers, recognizes the people, products and companies that have been instrumental in moving the 22-year-old ETF industry forward and that have helped create better options and outcomes for investors.

 

ETF Of The Year

In the past year, HEDJ’s success has hardly gone unnoticed. Investors have poured more than $15 billion into the fund, buying into views that the eurozone is poised for a rebound while protecting themselves from a weakening euro. HEDJ has clearly become the poster child in the past year of the growing popularity of currency-hedging exposure to foreign stocks.

"Investors who want to participate in Europe's economic recovery, but are concerned about the fluctuation of the currency, should consider HEDJ," Jeremy Schwartz, WisdomTree’s director of research, said recently about the fund.

"Currency moves are difficult to predict. Investors should ask themselves: 'Do I want a secondary currency exposure on top of local equity returns?' If there is little cost to hedge, as is currently the case in Europe, we believe taking the risk unhedged should be left to investors with full faith in the direction of the euro," he noted.

For WisdomTree—the issuer behind HEDJ—the craze for currency-hedged ETFs has translated into big asset gains. A year ago, it was another WisdomTree currency-hedged ETF, the WisdomTree Japan Hedged Equity Fund (DXJ), that took home the Best ETF of the Year award. That fund too raked in billions of dollars on the heels of Abenomics in Japan.

 

Lifetime Achievement: Lee Kranefuss

Lee Kranefuss helped build the biggest ETF company in the world, iShares, and this year he received ETF.com’s Lifetime Achievement award. To him, the honor is “premature,” although flattering.

That’s because Kranefuss is just now kicking off another chapter of his journey in the ETF industry. Since leaving iShares in 2010 after the company was acquired by BlackRock, Kranefuss has gone on to join Warburg Pincus, and Source—an independent ETF issuer—where he is leading the charge on next-generation product development.

What does he see as his biggest accomplishment thus far?

“First and foremost, it's having been able to light the fire,” Kranefuss told ETF.com. “I wasn't the only one who did it, but I’m proud of having been able to light some of the fire under a movement for individuals to adopt more institutional-style investment strategy.”

Kranefuss was selected from a group of luminaries that included John Bogle, Reggie Browne, Gus Sauter and Burton Malkiel.

 

Best New ETF Of 2014

The Market Vectors ChinaAMC China Bond ETF (CBON) took home this year’s Best New ETF of the Year award at a time when investor interest in gaining deeper access to the world’s second-biggest economy is intensifying.

The first-of-a-kind fund offered U.S. investors access to Chinese debt issued in mainland China for the very first time. That’s a $5 trillion debt market that’s the third largest in the world, and until 2014 remained largely off limits to U.S. investors.

Opening up access to China’s mainland debt markets when bond opportunities are looking thin elsewhere was certainly a timely addition to investors’ toolboxes. CBON came to market in November 2014, and it has gathered $19 million in assets under management.

“Given the size of the underlying market, and the importance of the Chinese economy, China has very little weight on a lot of indexes on the debt side,” Fran Rodilosso, senior investment officer for Van Eck’s Market Vectors, told ETF.com. “The drive behind creating this ETF was to increase access, even in the context of an emerging market allocation.”

“There’s a lot of talk about China slowing down, but we see opportunity in China in the long term,” Ed Lopez, Van Eck’s marketing director, told ETF.com. “To be able to provide access to such a large market and one that will potentially become a bigger part of global investors’ portfolios was a tremendous opportunity.”

 

Following is a list of all of the finalists in the various categories that were awarded tonight, and the respective winners in each category ...

 

 

Category 1: Lifetime Achievement Award

Awarded annually to one living individual for outstanding long-term contributions to ETF investor outcomes, whether from a position of media, regulation, product provider or investor. Previous winners are ineligible.
 

Winner: Lee Kranefuss – You won’t find an executive with more ETF-specific “street cred” than Lee Kranefuss. His almost-evangelical belief that the future of investing belonged to ETFs has been crucial to the rise of the industry. Under his direction, iShares grew to be the biggest ETF issuer in the world, and the unrivaled breadth of the company’s product line serves as the perfect metaphor of the power of ETFs.

 

Runners-Up:

  •  John Bogle
  •  Reggie Browne 
  •  Burton Malkiel
  •  Gus Sauter
     

 

Category 2: ETF of the Year  

Awarded to the ETF that has done the most to improve investor opportunities and outcomes in 2014, by opening new areas of the market, lowering costs, delivering new exposures or otherwise creating better options for investors. There is no requirement on when this fund launched.
 

Winner: WisdomTree Europe Hedged Equity (HEDJ)

 

HEDJ, the only nonvanilla ETF to make the top 10 flows list in 2014, has captured the attention (and dollars) of investors looking to make a currency-hedged bet on eurozone equities. With the euro on the rocks, the ETF’s ability to protect against a falling currency meant it outperformed nonhedged European equity ETFs by 10-12 percent for the year. HEDJ attracted $4.9 billion in inflows in 2014.

 

Runners-Up:

  • Global X GF China Bond (CHNB)
  • PIMCO 25+ Year Zero Coupon U.S. Treasury (ZROZ)
  • Vanguard Total International Bond (BNDX)
  • Vanguard Total Stock Market (VTI) 

 

 

Category 3: Best New ETF

Awarded to the most important ETF launched in 2014. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: Market Vectors ChinaAMC China Bond ETF (CBON)

 

CBON offered U.S. investors access to Chinese debt issued in mainland China for the very first time. With the Chinese market rallying and bond opportunities looking thin elsewhere, this novel exposure is a welcome addition to the mix.

 

Runners-Up:

  • EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ)
  • First Trust Dorsey Wright Focus 5 ETF (FV)
  • iShares Core Total USD Bond Market ETF (IUSB)
  • PowerShares DB Optimum Yield Diversified Commodity Strategy (PDBC)

 

Category 4: Most Innovative New ETF

 

Awarded to the most groundbreaking and disruptive ETF launched in 2014. This is an ETF that is pushing the envelope in terms of what kinds of exposures can be packaged into an ETF. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: ProShares CDS North American HY Credit (TYTE) and the ProShares CDS Short North American HY Credit (WYDE)

 

The ProShares CDS North American HY Credit ETF and the CDS Short North American HY Credit ETFs are the first U.S.-listed ETFs focusing on betting for or against the high-yield market through the use of index-based credit default swaps.

 

Runners-Up:

  • EGShares Blue Chip ETF (BCHP)
  • iShares Commodities Select Strategy ETF (COMT)
  • Reality Shares DIVS ETF (DIVY)
  • WisdomTree Emerging Markets ex-State-Owned Enterprises (XSOE)

 

 

Category 5: Best New U.S. Equity ETF

 

Awarded to the most important U.S. equity ETF launched in 2014. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: iShares Core Dividend Growth ETF (DGRO)

 

The iShares Core Dividend Growth ETF provides a very cost-effective way to capture companies that have a five-year track record of dividend increases. DGRO is broad, holding more than 300 companies, and makes its constituent selection based on dividends, dividend growth and payout ratio.

 

Runners-Up:

  • Deep Value ETF (DVP)
  • Etracs Wells Fargo MLP Ex-Energy ETN (FMLP)
  • First Trust RBA American Industrial Renaissance ETF (AIRR)
  • ValueShares US Quantitative Value ETF (QVAL)

 

 

Category 6: Best New International/Global Equity ETF:

 

Awarded to the most important international or global equity ETF launched in 2014. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap ETF (ASHS)

 

The Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap ETF is the first U.S.-listed ETF capturing China's mainland small-cap stocks. The fund uses its RQFII quota to hold stocks comprising the CSI 500 Index.

 

Runners-Up:

  • Deutsche X-trackers Harvest MSCI All China Equity ETF (CN)
  • EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ)
  • iShares MSCI ACWI Low Carbon Target ETF (CRBN) and SPDR MSCI ACWI Low Carbon Target ETF (LOWC)
  • WisdomTree Emerging Markets ex-State-Owned Enterprises ETF (XSOE)

 

Category 7: Best New Fixed-Income ETF

 

Awarded to the most important fixed-income ETF launched in 2014. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: ProShares CDS North American HY Credit (TYTE) and the ProShares CDS Short North American HY Credit (WYDE)

 

The ProShares CDS North American HY Credit and CDS Short North American HY Credit ETFs are the first U.S.-listed ETFs focusing on betting for or against the high-yield market through the use of index-based credit default swaps. 

 

Runners-Up:

  • FlexShares Credit-Scored US Corporate Bond Index (SKOR)
  • Global X GF China Bond ETF (CHNB)
  • iShares Core Total USD Bond Market ETF (IUSB | C)
  • Market Vectors ChinaAMC China Bond ETF (CBON)

 

 

Category 8: Best New Commodity ETF

 

Awarded to the most important commodity ETF launched in 2014. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: The AdvisorShares Gartman Gold ETFs (GEUR) (GYEN)

This suite of AdvisorShares Gartman gold ETFs targets gold prices against non-U.S. dollar currencies. GEUR targets gold denominated in euros; GYEN targets gold denominated in yen.

 

Runners-Up

  • Merk Gold Trust (OUNZ)
  • PowerShares DB Optimum Yield Diversified Commodity Strategy ETF (PDBC)

 

 

Category 9: Best New Currency ETF

 

There are no nominees in this category this year.

 

 

Category 10: Best New Alternatives ETF

 

Awarded to the most important alternatives ETF launched in 2014. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: ProShares Morningstar Alternatives Solution ETF (ALTS)

 

The ProShares Morningstar Alternatives Solution tracks an index of seven alternative ETFs, issued by ProShares, offering diversified exposure to the alternative space. The index allocates to the ETFs with an optimizer that aims to maximize risk-adjusted returns. The optimizer assumes investors have existing positions in stocks and bonds.

 

Runners-Up:

  • Cambria Global Asset Allocation ETF (GAA)
  • First Trust Long/Short Equity ETF (FTLS)
  • PowerShares Multi-Strategy Alternative Portfolio (LALT)
  • ProShares Managed Futures Strategy ETF (FUTS)

 

 

Category 11: Best New Asset Allocation ETF

 

Awarded to the most important ETF launched in 2014 that combines exposure to multiple asset classes. Note: Importance is measured by the overall contribution to positive investor outcomes. The award may recognize ETFs that open new areas of the market, lower costs, drive risk-adjusted performance or provide innovative exposures not previously available to most investors. Only ETFs with inception dates after Jan. 1, 2014, were eligible.

 

Winner: Global X | JPMorgan Efficiente ETF (EFFE)

 

The Global X | JPMorgan Efficiente ETF tracks an index that allocates across asset classes via ETFs based on recent risk and return performance, including developed and emerging market equities and bonds, REITs, TIPs, broad commodities and gold.

 

Runners-Up:

  • Cambria Global Momentum ETF (GMOM)
  • First Trust Strategic Income ETF (FDIV)
  • Global X | JPMorgan Efficiente ETF (EFFE)
  • iShares Commodities Select Strategy ETF (COMT)

 

 

Category 12: ETF Issuer of the Year

 

Awarded to the ETF issuer that has done the most to improve investor outcomes through product introductions, product performance, fund management, asset gathering, investor support and innovation.
 

 

Winner: First Trust

 

First Trust pulled in more than $11 billion in net new money in 2014, making it the fastest-growing firm outside of the “big 3” (iShares, State Street, Vanguard). It had positive inflows in 69 of its 94 ETFs, including large inflows into new funds like the First Trust Dorsey Wright Focus 5 (FV). The issuer bucked the “race to zero” fee trend and proved there was still room for new, nonvanilla products focused on outperforming the market. 

 

Runners-Up

  • BlackRock
  • Charles Schwab
  • Deutsche Bank
  • Vanguard
     

 

Category 13: Most Innovative ETF Issuer of the Year

 

Awarded to the ETF provider that has launched the most innovative and groundbreaking ETFs in 2014.

 

Winner: ProShares

 

ProShares branched out from its geared roots with the launch of pure credit-risk plays available (the ProShares CDS North American HY Credit fund (TYTE | D)  and the ProShares CDS Short North American HY Credit (WYDE), an infrastructure fund, a dividend growth strategy and two alternate ETFs, including a unique risk-weighted managed futures play, the ProShares Managed Futures Strategy (FUTS).
 

 

Runners-Up:

  • BlackRock
  • Reality Shares
  • Van Eck
  • WisdomTree

 

Category 14: New ETF Issuer of the Year

 

Awarded to the new ETF issuer that has done the most to improve investor outcomes through product introductions, product performance, fund management, investor support and innovation. Issuers must have launched their first ETF in 2014.

 

Winner: Reality Shares

 

Reality Shares’ DIVY extracts the difference between expected and actual dividend growth as reflected in options prices. This entirely new approach differs radically from conventional dividend growth funds whose return patterns are affected by underlying stock prices.

 

Runners-Up:

  • ARK Investment Management
  • BioShares
  • Merk Investments
  • WBI Shares

 

Category 15: Index Provider of the Year

 

Awarded to the index provider that has done the most to improve investor outcomes through index introductions, research, advisor support and more.

 

Winner: MSCI

 

With more than 650 ETFs tracking MSCI indexes globally, more ETFs track MSCI’s indexes than any other index provider. MSCI works with clients globally to conduct research and construct quality indexes, and has been focused on factor indexes in recent years.

                                                       

Runners-Up

  • ChinaBond
  • China Securities Index
  • Solactive
  • WisdomTree

 

Category 16: Index of the Year

 

Awarded to the index that has done the most to provide new ways of considering investment strategies, opportunities or ideas.

 

Winner: Bloomberg Dollar Spot Index

 

The Bloomberg Dollar index breaks decades of convention by weighting currencies based on their trade-weights with the U.S. Older currency indexes assign weights largely based on agreements set at Bretton Woods in 1944.
 

Runners-Up:

  • EMQQ Index
  • Endowment Index
  • MSCI ACWI Low Carbon Target Indexes
  • S&P 500

 

Category 17: ETF Liquidity Provider of the Year

 

Awarded to the ETF liquidity provider (including market maker, authorized participant, agency broker, etc.) that has done the most to improve investor outcomes through education, support, services, innovation and outreach.

 

Winner: Jane Street

 

The "broker's broker" has come out of the shadows and become a central player in large-scale trading, and is making a bigger name for itself than ever before.
 

Runners-Up:                                                                             

  • Cantor Fitzgerald
  • Goldman Sachs
  • KCG 
  • Susquehanna

 

 

Category 18: Best Online Broker for ETF-Focused Investors

 

Awarded to the online brokerage offering the best package for ETF-focused investors. This award will consider commission-free trading options, education materials, supporting services and other factors.
 

Winner: TD Ameritrade

 

TD Ameritrade’s tool set is second to none, and its commitment to commission-free ETFs—selected independently—is commendable.

 

Runners-Up:

  • Charles Schwab
  • Etrade
  • Fidelity
  • Interactive Brokers

 

Category 19: Best Wirehouse ETF Offering

 

Awarded to the wirehouse that offer its reps and advisors the best total offering in the ETF space, including research, data, tools, trading capabilities and education.

 

Winner: Morgan Stanley

 

Morgan Stanley's well-rounded offerings set the standard at wirehouses with solid due diligence, trading expertise and portfolio models.

 

Runners-Up:

  • Merrill Lynch
  • UBS
  • Wells Fargo

 

Category 20: Best ETF Offering For RIAs

 

Winner: Charles Schwab

 

Charles Schwab has been a leader in supporting ETF-focused financial advisors for years, from good basic services and commission-free trading to standout model portfolios from Windhaven.

 

Runners-Up:

  • Commonwealth Financial
  • ConvergEx
  • Envestnet
  • LPL Financial

 

Category 21: Best ETF Issuer Website

 

Awarded to the most informative and user-friendly website by an ETF issuer.

 

Winner: BlackRock 

 

BlackRock's now-streamlined fund pages offer top-level portfolio information at a glance, with more detailed holdings and returns information available to download. Tools, white papers and blogs round out a very-well-developed website.

 

Runners-Up:

  • First Trust
  • SPDRs
  • Van Eck
  • WisdomTree

 

Category 22: Best Index Provider Website

 

Awarded to the most informative and user-friendly website by an index provider.
 

Winner: Edhec Scientific Beta

 

Edhec Scientific Beta is the only index website to provide do-it-yourself index-building tools, for free. 

 

Runners Up:

  • Morningstar
  • MSCI
  • Russell
  • S&P Dow Jones

 

 

Category 23: Best ETF Issuer Capital Markets Desk

 

Awarded to the ETF issuer providing the most useful support to advisors for ETF trading.

 

Winner: BlackRock

 

Clients highlight BlackRock’s commitment to pre- and post-trade analytics.
 

 

Runners-Up:

  • Deutsche Bank
  • First Trust
  • WisdomTree
  • Van Eck

 

 

Category 24: ETF Strategist of the Year

 

Awarded to the ETF strategist/ETF model portfolio provider that has done the most to improve investor outcomes in the previous year. Automated investment services are eligible for this award, as they provide managed portfolios en masse to investors.

 

Winner: RiverFront Investment Group

 

This firm features a seasoned and well-oiled machine that’s devoted to the vast potential of ETFs. The team, assembled at Wachovia and reassembled at RiverFront, is utterly transparent in how it carries out its business, disclosing and explaining trades almost in real time to its clients, creating a compelling metaphor for ETFs themselves.

 

"We are very excited and humbled about achieving this milestone in our short history,” a company spokesperson told ETF.com. “What is most rewarding to us about achieving this award is the simultaneous deepening of relationships we are forging with financial advisors across the country.”

 

Runners-Up:

  • Betterment
  • Sage Advisory Services
  • Wealthfront
  • Windhaven

Category 25: ETF Ticker of the Year

 

Awarded to the ETF with the best new ETF ticker. The ETF must have launched in 2014 to qualify. 2014 was a year of great ticker selections for the ETF industry, but none was better than HACK, which perfectly captured the theme that PureFunds was going after in its cybersecurity ETF. With the Sony hack, the eBay breakin and more dominating the news waves, investors everywhere are turning to HACK as a hot play on a hot theme.

 

 

Winner: “HACK,” PureFunds ISE Cyber Security ETF (HACK)

 

 

Runners-Up:

  • CRBN: iShares MSCI ACWI Low Carbon Target ETF
  • OUNZ: Merk Gold ETF
  • TAPR: Barclays Inverse US Treasury Composite ETN
  • TYTE/WYDE: ProShares CDS North American HY Credit and ProShares CDS Short North American HY Credit

 

 

Category 26: Best ETF Research Broker-Dealer Team

 

Awarded to the independent broker-dealer offering its reps and advisors the best total offering in the ETF space, including research, data, tools, trading capabilities and education.

 

Winners: Wells Fargo & Morgan Stanley

 

When it comes to keeping tabs on the fast-changing ETF market, it turns out experience is what matters almost more than anything else. This year, two firms tie for the honor of having the best team on the street.

 

 

Editor’s Note On Methodology:

 

The award selection process follows three steps:

 

  1. An open nominating process
  2. A “Nominating Committee” composed of senior members of ETF.com’s editorial and analytics components narrows the nominees to a maximum of five in each category.
  3. A “Selection Committee” of independent ETF experts votes on the winners.

 

The methodology is explained in detail here.

 

  

 

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