Smart-beta ETFs have gathered an astounding $52 billion in fresh net assets year-to-date. That equates to about 30 percent of all assets flowing into U.S.-listed ETFs this year.
Topping that list is none other than the WisdomTree Europe Hedged Equity ETF (HEDJ | B-50), with asset gains of $15.4 billion year-to-date, according to FactSet data.
1. HEDJ Most Popular Smart-Beta ETF This Year
HEDJ’s popularity centers on the idea that the eurozone is poised to rebound, but the euro should remain weak relative to the U.S. dollar. The fund, which tracks an index of eurozone dividend-paying companies that derive most of their revenues from exports outside the eurozone, hedges out currency risk, and it has more than $21 billion in assets today.
While the Federal Reserve is preparing to increase interest rates for the first time in more than six years, the European Central Bank is still easing policies in an effort to spark growth—a dynamic that has made a strategy like HEDJ hugely popular with investors.
Consider the fund’s performance: Compared to a noncurrency-hedged eurozone-focused ETF such as the iShares MSCI EMU ETF (EZU | A-83), HEDJ’s total returns have been stellar in 2015, as the chart below shows: