Is WisdomTree Europe Hedged Equity ETF (HEDJ) a Strong ETF Right Now?

Zacks Equity Research
·3-min read

Designed to provide broad exposure to the European Equity ETFs category of the market, the WisdomTree Europe Hedged Equity ETF (HEDJ) is a smart beta exchange traded fund launched on 01/04/2010.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

HEDJ is managed by Wisdomtree, and this fund has amassed over $1.95 billion, which makes it one of the larger ETFs in the European Equity ETFs. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree Europe Hedged Equity Index.

The WisdomTree Europe Hedged Equity Index is designed to provide exposure to European equities while at the same time neutralizing exposure to fluctuations between the Euro and the U.S. dollar.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Operating expenses on an annual basis are 0.58% for HEDJ, making it on par with most peer products in the space.

HEDJ's 12-month trailing dividend yield is 2.98%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Stellantis Nv (STLAM) accounts for about 9.54% of the fund's total assets, followed by Banco Bilbao Vizcaya Argentaria Sa (BBVA) and Asml Holding Nv (ASML).

HEDJ's top 10 holdings account for about 45.34% of its total assets under management.

Performance and Risk

So far this year, HEDJ has added roughly 10.95%, and it's up approximately 21.98% in the last one year (as of 06/03/2024). During this past 52-week period, the fund has traded between $37.48 and $48.49.

The ETF has a beta of 0.90 and standard deviation of 16.19% for the trailing three-year period, making it a medium risk choice in the space. With about 169 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree Europe Hedged Equity ETF is a reasonable option for investors seeking to outperform the European Equity ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

JPMorgan BetaBuilders Europe ETF (BBEU) tracks MORNINGSTAR DEV EUROPE TARGET MKT EXP ID and the Vanguard FTSE Europe ETF (VGK) tracks FTSE Developed Europe All Cap Index. JPMorgan BetaBuilders Europe ETF has $8.17 billion in assets, Vanguard FTSE Europe ETF has $20.21 billion. BBEU has an expense ratio of 0.09% and VGK charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

WisdomTree Europe Hedged Equity ETF (HEDJ): ETF Research Reports

ASML Holding N.V. (ASML) : Free Stock Analysis Report

Banco Bilbao Viscaya Argentaria S.A. (BBVA) : Free Stock Analysis Report

Vanguard FTSE Europe ETF (VGK): ETF Research Reports

JPMorgan BetaBuilders Europe ETF (BBEU): ETF Research Reports

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