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More Currency-Hedged ETFs From WisdomTree

WisdomTree Investments (NASDAQ: WETF ) is the name of the game in the currency-hedged equities ETFs space. Though other big issuers like State Street and bellwether iShares of BlackRock are now looking to beef up their currency-hedged portfolio, WisdomTree seems in no mood to give up its top rank among the currency-hedged ETFs’ space (read: Can Anyone Match WisdomTree in Currency-Hedged ETFs? ). After all, the investing paradigm will now be in focus as the Fed is on the course of policy tightening and the most developed economies are walking along the easy-money path. Among them, the Euro zone and the Japan are under the spell of QE polices. Thanks to this policy differential, the greenback will likely gain strength in the coming days while other developed currencies will lose it. Probably this is why WisdomTree rolled out four currency-hedged ETFs lately, each with a focus on dividends. Let’s delve a little deeper: WisdomTree Dynamic Currency Hedged International Equity Fund (BATS: DDWM ) The newly launched fund seeks to provide exposure to dividend-paying companies in the industrialized world ex U.S. and Canada while hedging exposure to fluctuations between the U.S. dollar and foreign currencies (read : 2 Excellent Dividend Growth ETFs in Focus ). With this focus, the index currently holds a well-diversified basket with HSBC Holdings, Nestle SA and GlaxoSmithKline Plc as the top three holdings. In fact, the fund also provides a nice exposure to various sectors. Financials tops the list with 47.9% allocation, followed by Industrials with 24.5%, Consumer Staples with 23.4% and Consumer Discretionary with 22.9% of the basket. Country-wise, United Kingdom and Japan get double-digit exposure. The fund charges 35 bps in fees. Competition: The newly launched product is likely to face competition from quite a number of funds prevalent in the global equities space. Still, a few ETFs can emerge as strong contenders. The db X-trackers MSCI All World ex US Hedged Equity Fund (NYSEARCA: DBAW ) and the MSCI All World ex US High Dividend Yield Hedged Equity ETF (NYSEARCA: HDAW ) are some of the examples. WisdomTree Dynamic Currency Hedged International SmallCap Equity Fund (BATS: DDLS ) The fund looks to track the small-cap dividend-paying companies of the industrialized economy outside of the U.S. and Canada while offering currency-hedging exposure. The fund is pretty well spread out across components with no firm making up more than 0.56% of assets. Salmar ASA, Cofinimmo and Ladbrokes Plc are the top three holdings of the index. The ETF is skewed toward Industrials (48.8%), Consumer Discretionary (41.2%) and Financials (35.6%). In terms of country allocation, Japan (27.9%), U.K. (16.3%) and Australia (10.9%) take the leading positions. The fund’s net expense ratio is 0.43% annually. Competition: The foreign mid and small cap equities ETF space is relatively less jam-packed. In the set, while non-hedged small-cap ETFs like the FTSE All-World ex-US Small Cap Index ETF (NYSEARCA: VSS ) and the FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio ETF (NYSEARCA: PDN ) pose as threats, products like the Currency Hedged MSCI EAFE Small-Cap ETF (NYSEARCA: HSCZ ) may give direct competition. WisdomTree Dynamic Currency Hedged Europe Equity Fund (BATS: DDEZ ) This one follows the same strategy with a focus on European stocks. In terms of country allocation, Germany, France, Spain and Italy are leading with double-digit exposure. Company-specific concentration risk is moderate with around 4.25% exposure. Anheuser-Busch InBev NV, Banco Santander SA and Total SA are the top three holdings of the fund. The fund has a tilt toward Financials (46.9%) while Industrials, Consumer Discretionary, Consumer Staples and Utilities account for considerable weight in the fund. The fund’s net expense ratio is 0.43% annually. Competition: The hedged Europe equities ETFs are teeming with products. The WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) , the Deutsche X-trackers MSCI Europe Hedged Equity ETF (NYSEARCA: DBEU ) and the ProShares Hedged FTSE Europe ETF (NYSEARCA: HGEU ) are to give neck-and-neck competition. WisdomTree Dynamic Currency Hedged Japan Equity Fund (BATS: DDJP ) Obviously, there will be a separate fund for Japan with the above-mentioned investment objective. WisdomTree already has several successful currency-hedged ETFs on Japan. Toyota Motors, NTT DoCoMo, Nippon Telegraph are the top three holdings of the fund. No stock accounts for more than 4.60% of the basket. Consumer Discretionary (41.9%), Industrials (39.4%) and Financials (33.1%) are the top three sectors of the fund. Competition: The likely peers of this newbie are the WisdomTree Japan Hedged Dividend Growth ETF (NYSEARCA: JHDG ) , the WisdomTree Japan Dividend Growth Fund (NYSEARCA: JDG ) and the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) . Link to the original article on Zacks.com

Complete List Of 101 ETP Closures In 2015

A total of 101 U.S.-listed exchange-traded funds (“ETFs”) and exchange-traded notes (“ETNs”) had their listings removed in 2015, one shy of the record 102 closures in 2012. Of the 2,405 U.S. exchange-traded products (“ETPs”) launched since 1993, when the industry began, only 1,845 remain, making the lifetime death toll 560 (475 ETFs and 85 ETNs). This puts the historical mortality rate at 23.3%, up from 21.6% a year ago. It’s getting tougher to survive out there. Click to enlarge A significant, but uncelebrated, milestone was achieved in 2015: the lifetime death toll reached 500 . Broken down by major categories, the 101 closures of 2015 consisted of 11 sector, 14 style and strategy, 21 global and international, 12 bond, 10 inverse, 17 leveraged and inverse, 12 commodity, and four currency products. Slicing another direction reveals 79 of the closures were ETFs and 22 were ETNs. Nine of the shuttered ETFs were actively managed funds. Percentage-wise, ETN closures were more significant. During 2015, there were only a dozen launches, and ETNs declined from 211 to 201. This is the largest-ever annual decline of ETNs, and the number of active listings remains well below the peak of 218 established in mid-2012. Closures affected 20 brands and sponsors. Three firms completely exited the business by closing their entire product lines. The Royal Bank of Scotland (NYSE: RBS ) closed all 13 of its ETNs, Russell closed its one remaining ETF after shutting down the other 25 back in 2012 , and Source closed its one and only U.S.-listed ETF. As an ETF sponsor, Source lasted less than seven months in the U.S. market and now holds the record for the shortest sponsor lifespan. Sponsors and brands with the highest closure quantities for the year included BlackRock iShares (19), ProShares (19), RBS ETNs (13), Deutsche X-trackers (7), Invesco PowerShares (6), and AdvisorShares (6). Assets in these closed products averaged $25.4 million, for a total of $2.57 billion. However, a large portion can be attributed to the three target-maturity ETFs with their planned maturity and liquidation dates. These were the Guggenheim BulletShares 2015 High Yield Corporate Bond ETF (NYSEARCA: BSJF ) at $469 million, the Guggenheim BulletShares 2015 Corporate Bond ETF (NYSEARCA: BSCF ) at $363 million, and the iShares iBonds Sep 2015 AMT-Free Muni Bond ETF (NYSEARCA: IBMD ) at $89 million. Strategic closures also had an impact on the numbers. The decision by RBS to exit the business left $827 million on the table, including $488 million in the RBS U.S. Large Cap Trendpilot ETN (NYSEARCA: TRND ) and $144 million in the RBS US Mid Cap Trendpilot ETN (NYSEARCA: TRNM ). Deutsche Bank (NYSE: DB ) bet the farm on currency hedging and closed most of its non-hedged products, including two with assets of more than $40 million each. The Invesco-DB partnership appeared to come to an end when all of the PowerShares ETNs issued by DB were closed and liquidated. With the exception of out-of-the-blue strategic closure decisions, ETF Deathwatch continues to do a good job of identifying the zombie ETFs and warning investors of potential fund closures. Of the 101 liquidated products, 79 were on ETF Deathwatch when their terminations were announced. Excluding the strategic decisions mentioned above, just nine of the closures were not on ETF Deathwatch. Many of those had assets above $25 million, which suggests the current criteria may not be strict enough. Ages of the liquidated products ranged from less than seven months for the Source EUROSTOX 50 ETF (NYSEARCA: ESTX ) to 7.9 years for a dozen of the ProShares ETFs. In all, 21 of the products were more than seven years old, suggesting that sponsors had been willing to subsidize these funds for many years before giving up hope of them ever becoming profitable. Given the increasingly competitive landscape, it’s not clear sponsors will exhibit such patience going forward. The interactive table below is currently sorted by product name. ETF and ETN Closures of 2015 # Ticker Name Last Day Deathwatch Notes 1 AGLS AdvisorShares Accuvest Global Long Short ETF 08/07/2015 Yes 1 2 ACCU AdvisorShares Accuvest Global Opportunities ETF 01/09/2015 1 3 HDGI AdvisorShares Athena International Bear ETF 01/09/2015 Yes 1 4 GGBP AdvisorShares Gartman Gold/British Pound ETF 01/26/2015 Yes 1 5 GLDE AdvisorShares International Gold ETF 01/26/2015 Yes 1 6 DBIZ AdvisorShares Pring Turner Business Cycle ETF 10/02/2015 Yes 1 7 CSMB CS X-Links 2x Monthly Merger Arbitrage Liquid Index ETN 07/02/2015 Yes 8 CSMN CS X-Links HOLT Market Neutral Global Equity ETN 07/02/2015 Yes 9 TDD Deutsche X-trackers 2010 Target Date ETF 05/18/2015 Yes 10 TDH Deutsche X-trackers 2020 Target Date ETF 05/18/2015 11 TDN Deutsche X-trackers 2030 Target Date ETF 05/18/2015 12 TDV Deutsche X-trackers 2040 Target Date ETF 05/18/2015 13 TDX Deutsche X-trackers In-Target Date 05/18/2015 Yes 14 UTLT Deutsche X-trackers Regulated Utilities 09/09/2015 Yes 15 SUBD Deutsche X-trackers Solactive Investment Grade Subordinated Debt 09/09/2015 Yes 16 SYTL Direxion Daily 7-10 Year Treasury Bull 2x 10/20/2015 Yes 17 MATL Direxion Daily Basic Materials Bull 3x 10/20/2015 Yes 18 BAR Direxion Daily Gold Bull 3x 06/19/2015 Yes 19 MDLL Direxion Daily Mid Cap Bull 2x 10/20/2015 Yes 20 BCHP EGShares Blue Chip 10/30/2015 Yes 21 BRXX EGShares Brazil Infrastructure 10/30/2015 Yes 22 AGOL ETFS Physical Asian Gold Shares 08/12/2015 23 BRAF Global X Brazil Financials 10/08/2015 Yes 24 AZIA Global X Central Asia & Mongolia Index 10/08/2015 Yes 25 GURX Global X Guru Small Cap Index 10/08/2015 Yes 26 JUNR Global X Junior Miners 10/08/2015 Yes 27 BSCF Guggenheim BulletShares 2015 Corp Bond 12/30/2015 2 28 BSJF Guggenheim BulletShares 2015 HY Corp Bond 12/30/2015 2 29 HFIN Horizons S&P Financial Sel Sec Covered Call 03/20/2015 Yes 30 IFAS iShares Asia Developed Real Estate 08/21/2015 Yes 31 MONY iShares Financials Bond 08/21/2015 Yes 32 FCHI iShares FTSE China 08/21/2015 33 IBMD iShares iBonds Sep 2015 AMT-Free Muni Bond 09/01/2015 2 34 ENGN iShares Industrials Bond 08/21/2015 Yes 35 AAIT iShares MSCI All Country Asia Info Tech 08/21/2015 Yes 36 AXJS iShares MSCI All Country Asia x-Japan SmallCap 08/21/2015 Yes 37 EWAS iShares MSCI Australia Small-Cap 08/21/2015 Yes 38 EWCS iShares MSCI Canada Small-Cap 08/21/2015 Yes 39 EMDI iShares MSCI Emerging Markets Cons Discretionary 08/21/2015 Yes 40 ESR iShares MSCI Emerging Markets Eastern Europe 08/21/2015 41 EEME iShares MSCI Emerging Markets EMEA 08/21/2015 Yes 42 EMEY iShares MSCI Emerging Markets Energy Sector 08/21/2015 Yes 43 EGRW iShares MSCI Emerging Markets Growth 08/21/2015 Yes 44 EVAL iShares MSCI Emerging Markets Value 08/21/2015 45 EWHS iShares MSCI Hong Kong Small-Cap 08/21/2015 46 EWSS iShares MSCI Singapore Small-Cap 08/21/2015 Yes 47 IFNA iShares North America Real Estate 08/21/2015 48 AMPS iShares Utilities Bond 08/21/2015 49 QEM Market Vectors MSCI Emerging Markets Quality 09/18/2015 Yes 50 QDEM Market Vectors MSCI Emerging Markets Quality Dividend 09/18/2015 Yes 51 QXUS Market Vectors MSCI International Quality 09/18/2015 Yes 52 QDXU Market Vectors MSCI International Quality Dividend 09/18/2015 Yes 53 BARL Morgan Stanley S&P 500 Crude Oil ETN 01/29/2015 Yes 54 FIVZ PIMCO 3-7 Year U.S. Treasury Index 09/23/2015 Yes 55 TENZ PIMCO 7-15 Year U.S. Treasury Index 09/23/2015 56 FORX PIMCO Foreign Currency Strategy Active 09/23/2015 Yes 1 57 ITLT PowerShares DB 3x Italian T-Bond Futures ETN 02/24/2015 58 UUPT PowerShares DB 3x Long USD Idx Futures ETN 02/24/2015 59 UDNT PowerShares DB 3x Short USD Idx Futures ETN 02/24/2015 Yes 60 ITLY PowerShares DB Italian T-Bond Futures ETN 02/24/2015 Yes 61 DEFL PowerShares DB US Deflation ETN 02/24/2015 Yes 62 INFL PowerShares DB US Inflation ETN 02/24/2015 Yes 63 FINF ProShares Short 30 Year TIPS/TSY Spread 01/08/2015 Yes 64 GDAY ProShares Ultra Australian Dollar 06/18/2015 Yes 65 UKW ProShares Ultra Russell Midcap Growth 01/08/2015 Yes 66 UVU ProShares Ultra Russell Midcap Value 01/08/2015 Yes 67 UKF ProShares Ultra Russell1000 Growth 01/08/2015 Yes 68 UVG ProShares Ultra Russell1000 Value 01/08/2015 Yes 69 UKK ProShares Ultra Russell2000 Growth 01/08/2015 Yes 70 UVT ProShares Ultra Russell2000 Value 01/08/2015 Yes 71 UWC ProShares Ultra Russell3000 01/08/2015 Yes 72 UINF ProShares UltraPro 10 Year TIPS/TSY Spread 01/08/2015 Yes 73 SINF ProShares UltraPro Short 10yr TIPS/TSY Sprd 01/08/2015 Yes 74 SDK ProShares UltraShort Russell Midcap Growth 01/08/2015 Yes 75 SJL ProShares UltraShort Russell Midcap Value 01/08/2015 Yes 76 SFK ProShares UltraShort Russell1000 Growth 01/08/2015 Yes 77 SJF ProShares UltraShort Russell1000 Value 01/08/2015 Yes 78 SKK ProShares UltraShort Russell2000 Growth 01/08/2015 Yes 79 SJH ProShares UltraShort Russell2000 Value 01/08/2015 Yes 80 TWQ ProShares UltraShort Russell3000 01/08/2015 Yes 81 TLL ProShares UltraShort Telecommunications 09/14/2015 Yes 82 TCHI RBS China Trendpilot ETN 07/06/2015 Yes 83 DRGS RBS Global Big Pharma ETN 07/06/2015 Yes 84 TBAR RBS Gold Trendpilot ETN 07/06/2015 85 TNDQ RBS NASDAQ 100 Trendpilot ETN 07/06/2015 86 TWTI RBS Oil Trendpilot ETN 07/06/2015 Yes 87 RGRA RBS Rogers Enhanced Agriculture ETN 07/06/2015 Yes 88 RGRC RBS Rogers Enhanced Commodity Index ETN 07/06/2015 Yes 89 RGRE RBS Rogers Enhanced Energy ETN 07/06/2015 Yes 90 RGRI RBS Rogers Enhanced Industrial Metals ETN 07/06/2015 Yes 91 RGRP RBS Rogers Enhanced Precious Metals ETN 07/06/2015 Yes 92 ALTL RBS US Large Cap Alternator ETN 07/06/2015 Yes 93 TRND RBS US Large Cap Trendpilot ETN 07/06/2015 94 TRNM RBS US Mid Cap Trendpilot ETN 07/06/2015 95 ONEF Russell Equity 01/26/2015 Yes 1 96 ESTX Source EURO STOXX 50 04/10/2015 97 VRD SPDR Nuveen S&P VRDO Municipal Bond 03/18/2015 Yes 98 KME SPDR S&P Mortgage Finance 03/18/2015 Yes 99 GMFS SPDR S&P Small Cap Emerging Asia Pacific 03/18/2015 Yes 100 USMI United States Metals 03/18/2015 Yes 101 EU WisdomTree Euro Debt 02/11/2015 Yes 1 Showing 1 to 101 of 101 entries Notes : 1) actively managed, 2) reached planned maturity. All exchange traded notes are identified with “ETN” as part of their name description.

How Much Should You Hedge Currencies Today?

By Jeremy Schwartz Currency-hedged exchange-traded funds (ETFs) have been THE story in ETFs over the last three years as one of the leading categories for ETF flows. This has caused some critics to say the movement into currency-hedged ETFs is overdone. First and foremost, we think this assessment underestimates the investment thesis for strategic currency-hedged allocations . More on that below. Second, even based purely on flows, these would-be contrarians are missing the bigger picture. The flows toward currency-hedged ETFs have occurred in two of the smaller pieces of the asset allocation pie-Europe and Japan. When we look at Morningstar categorization for non-U.S. equities, Europe had approximately $88 billion in assets under management (AUM) as of November 2015, Japan had approximately $48 billion of AUM and the foreign large-cap category was approximately $1.3 trillion. 1 While we think Europe and Japan can become bigger categories over time as investors view them more favorably, broad international allocations are more common. In the dedicated European and Japanese category of investments, the adoption of currency hedging has been staggering. Currency-hedged ETFs, which were nonexistent six years ago, now represent as much as one-third of total European-focused AUM in the U.S. and 40% of total Japanese AUM-when including both mutual funds and ETFs. 2 Yet in the broad international category, the trend toward hedging, in our view, hasn’t even started, with only 2% to 3% of the total $1.3 trillion in the category being strategically hedged. WisdomTree believes currency offers uncompensated risk and that most of the $1.3 trillion in assets is taking on more risk than necessary to deliver the returns of international equities. Myths about Hedging Many active managers propagate a generalization and myth that it is expensive to hedge currencies. We see interest rate differentials as the most important cost to hedge. For certain markets, such as Brazil, it could be expensive to hedge because short-term interest rates in Brazil are approximately 14% 3 , and this creates a high hurdle for how much currency has to decline to break even from the hedge. Being Paid More to Hedge But in general, over the last 30 years, an investor was paid on average about 40 basis points (bps) per year to hedge developed world currency exposures 4 . In Japan over the last 30 years, an investor was paid on average almost 2.5% per year to hedge currency exposures simply from the interest rate differentials in the forward contracts. 5 With the U.S. Federal Reserve now raising its Federal Funds Rate, and other central banks continuing to pursue stimulative policy, an investor is now being paid more to hedge foreign currencies in the short run, making hedging even more attractive from an interest rate perspective in 2016 and 2017 than it was in 2015, 2014 or 2013, when currency hedging first took off. This is a reason hedging is becoming more attractive . Is It Too Late to Hedge the Euro and Yen? We argue that currency hedging should serve as the baseline and that investors should add currency risk whenever they view it as less attractive to hedge (or more desirable to have the currency exposure). Investors can switch from hedged to unhedged exposures or blend such strategies together-but now there is a new solution through our dynamically hedged family. This index family solves the challenge of trying to time when currency hedging should be in place. WisdomTree Investments partnered with Record Currency Management to build an index family that incorporates Record’s hedging signals into a dynamically hedged index. 6 Record has been evaluating currency risk and return trade-offs for more than 30 years, and research showed the most important hedging signals for developed world currencies are threefold: The Interest Rate: If the implied interest rate in the United States is higher than that in the targeted currency, it is more attractive to hedge. This signal helps manage the cost to hedge when it is more expensive to do so (like in Australia today). Momentum: Simply put, a downward trend in the targeted currency would signal to put on the hedge, whereas an upward or appreciating trend would signal to take it off. Value: When the targeted currency is overvalued compared to “fair value,” as determined by purchasing power parity (PPP), it is attractive to hedge, and when deeply undervalued, it is less attractive to hedge. Importantly, this is a long-run signal, and a wide band is used in applying this signal. Monitoring the Hedge Ratios by Currency & by Signal Click to enlarge For definitions of terms in the chart, visit our glossary . The currency-hedge signals are determined on an individual currency basis, but in aggregate, for the developed world currency exposures in the WisdomTree Dynamic Currency Hedged International Equity Index , the models suggest hedging 71.05%, and for the WisdomTree Dynamic Currency Hedged International SmallCap Equity Index , they suggest hedging 64.57%. These models are by nature dynamic, and when it is more/less favorable to hedge, some of these hedge ratios will come up/down. While many investors think they missed the opportunity to switch to currency-hedged strategies, we reiterate that we believe the most important drivers of long-term currency movements suggest hedging a majority of your currency exposures today. Sources Morningstar Direct. Europe refers to the universe of U.S.- listed mutual funds and ETFs within the Europe Stock peer group. Japan refers to the universe of U.S.- listed mutual funds and ETFs within the Japan Stock peer group. Broad international refers to the universe of U.S.- listed mutual funds and ETFs within the Foreign Large Value, Foreign Large Blend and Foreign Large Growth peer groups. Data is as of 11/30/2015. Morningstar Direct. Same universes and as of date as the prior footnote. Bloomberg, with data as of 12/31/15. Developed world currency exposures refer to those defined by the MSCI EAFE Index universe from 12/31/1988 to 9/30/2015. Source for paragraph: Record Currency Management, with data from 12/31/1988 to 9/30/2015. No WisdomTree Fund is sponsored, endorsed, sold or promoted by Record Currency Management (“Record”). Record has licensed certain rights to WisdomTree Investments, Inc., as the index provider to the applicable WisdomTree Funds, and Record is providing no investment advice to any WisdomTree Fund or its advisors. Record makes no representation or warranty, expressed or implied, to the owners of any WisdomTree Fund regarding any associated risks or the advisability of investing in any WisdomTree Fund. Important Risks Related to this Article Hedging can help returns when a foreign currency depreciates against the U.S. dollar, but it can hurt when the foreign currency appreciates against the U.S. dollar. Investments focused in Japan or Europe increase the impact of events and developments associated with the regions, which can adversely affect performance. Jeremy Schwartz, Director of Research As WisdomTree’s Director of Research, Jeremy Schwartz offers timely ideas and timeless wisdom on a bi-monthly basis. Prior to joining WisdomTree, Jeremy was Professor Jeremy Siegel’s head research assistant and helped with the research and writing of Stocks for the Long Run and The Future for Investors. He is also the co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” and the Wall Street Journal article “The Great American Bond Bubble.”