MarketMuse update courtesy of MarketWatch’s 12 March article, “Dollar surge has investors scrambling for a piece of this European ETF”. From the National Swiss Bank’s huge announcement in January to Greece’s continued demise, the European market has seen better days. While the US market continues to recover, the US dollar has almost completely recovered to the being equivalent with the Euro which is making investor grab at Euro ETFs.
Back in 2008, $1.60 bought one euro EURUSD, -1.10% Fast forward to today, and the U.S. dollar is surging toward parity with the hobbled currency. Just a few more ticks to go.
Of course, the huge currency shake-up is bad news for U.S. exporters but it’s great for investors in the WisdomTree Europe Hedged Equity fund HEDJ, +0.19% And they are throwing gobs of money at it. Read: 4 stock plays that are attracting investor dollars this year.
In the past year alone, $12 billion has flowed into the fund, a more than tenfold increase. The ETF is now the biggest covering Europe with almost $14 billion in assets, according to ETF Database. That’s enough to displace the Vanguard FTSE Europe giant VGK, -0.85% as the region’s top dog.
Olly Ludwig, managing editor for ETF.com, points out that the dollar’s rise has turned a neutral investment into a world beater.
“There’s an elegant mirror-like quality to the chart that isolates the currency factor rather cleanly,” Ludwig said. “Were it not for the currency hedge, HEDJ would be about flat.”
Investors have obviously been taking notice, and currency-hedged ETFs, in general, have seen spikes in asset growth. Ludwig pointed out that, on Monday alone, HEDJ and the WisdomTree Japan Hedged Equity fund DXJ, -0.39% combined to attract $1 billion. In a single day.
For the entire article from MarketWatch, click here.
