WisdomTree Unveils Fund of Funds ETF
January 5, 2010

SAN DIEGO (ETFguide.com) – WisdomTree Investments has just introduced the WisdomTree International Hedged Equity Fund (NYSEArca: HEDJ).

HEDJ is benchmarked to the WisdomTree DEFA International Hedged Equity Index, a custom index developed by the New York-based company. The index and the fund are designed to provide exposure to stocks in Europe, Far East Asia and Australia. 

To achieve its investment objective, HEDJ  invests primarily in other ETFs, namely the WisdomTree Europe Total Dividend Fund (NYSEArca: DEB), Japan Total Dividend Fund (NYSEArca: DXJ) and Pacific ex-Japan Total Dividend Fund (NYSEArca: DND).

The fund of funds (FOF) ETF category has been one of the fastest growing areas in terms of new ETFs offered. Instead of investing in individual securities, FOF ETFs invest in other ETFs.

Providers like BlackRock offer target date FOF ETFs that allocate specified portions in stocks, bonds and other asset classes in line with a person’s projected retirement date. For example, the iShares S&P Target Date 2020 Index Fund (NYSEArca: TZG) is designed for individuals with a projected retirement date in the vicinity of 2020. TZG invests in nine different iShares ETFs has annual expenses of 0.29%. Currently, TZG has around 69% committed to stocks and 31% to bonds.

Other ETFs like the IQ Hedge Macro Tracker ETF (NYSEArca: MCRO) and IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI) use strategic asset allocation in other ETFs. MCRO and QAI charge 0.75% in annual expenses and around 0.33% in additional fees for the cost of the underlying ETFs.

According to WisdomTree, HEDJ will also hedge exposure to fluctuations between the value of the U.S. dollar and selected non-U.S. currencies in the regions it tracks. 

HEDJ’s annual expense ratio is 0.58%, which includes the cost of the underlying WisdomTree ETFs it owns.