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 ...

 

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