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This Currency-Hedged European Stock Fund Is Soaring

From Zacks: For investors seeking momentum, WisdomTree Europe Hedged Equity Fund (HEDJFree Report) is probably on radar now. The fund just hit a 52-week high, and is up about 25.6% from its 52-week low price of $45.83 per share.But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

HEDJ in Focus    

HEDJ offers exposure to the broad European stocks while at the same time provides hedge against any fall in the euro. Holding 134 stocks in its basket, it has double-digit exposure in four sectors –– industrials, consumer discretionary, consumer staples, and financials. Germany and France dominate in terms of country profile as these make up for one-fourth of the portfolio each. The ETF charges 58 bps in annual fees (see: all the European Equity ETFs here).

Why the Move?

The currency-hedged corner has been an area to watch lately given the surge in greenback to the highest level in almost 14 years. This is because the encouraging fundamentals are making international investment a compelling opportunity in the U.S. but a strong dollar could wipe out gains when repatriated in U.S. dollar terms. As such, investors are flocking to currency hedged ETFs to tap bullish fundamentals, dodging the effects of a strong greenback. In particular, Europe seems to be the most attractive bet at present given that the euro/dollar parity is on the way.

More Gains Ahead?

Currently, HEDJ has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk oulook, so it is hard to get a handle on its future returns one way or the other. It seems that this fund might remain strong given a high weighted alpha of 10.80% and a mediocre 20-day volatility of 12.15%. As a result, there is still some promise for investors who want to ride on this surging ETF.

This article is brought to you courtesy of Zacks Research.

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