WisdomTree expands currency hedged classes for CoCo and Commodities ETFs
ETF provider WisdomTree has listed new currency-hedged share classes for the WisdomTree AT1 CoCo Bond UCITS ETF and the WisdomTree Enhanced Commodity UCITS ETF on the London Stock Exchange.
Rafi Aviav, WisdomTree Head of Product Development in Europe says: “The CoCo Bond ETF offers uniquely broad and diversified exposure to CoCos and the index tracks 95 per cent of the liquid developed AT1 CoCo bond universe across Euro, Pound and Dollar denominations. For those investors that wish to mitigate currency risk in their portfolios the fund now offers EUR-hedged, GBP-hedged and USD-hedged share classes of the underlying, diversified strategy.”
The hedged share classes of the Fund will provide exposure to foreign assets while providing greater investor protection against the impact of adverse currency movements and allowing them to obtain a purer exposure to the underlying asset.
“We believe that the best way to take currency risk out of CoCos is through a currency hedge applied to a broad, diversified portfolio rather than taking a view on portfolios of a single denomination, which tend to be concentrated and unrepresentative of the underlying universe,” says Aviav.
The hedged share classes of the WisdomTree Enhanced Commodity UCITS ETF are designed to provide exposure to enhanced broad commodities while providing greater investor protection against the impact of adverse currency movements. The Fund also uses an innovative dynamic roll process, with a view to minimising roll costs in contango, and to maximising roll return in backwardation, ultimately aiming to reduce the long-term costs of holding commodity exposures.
WisdomTree writes that net flows into commodity ETPs globally stand at USD1.14 billion year to date, and gaining exposure to commodities has become an increasingly important feature in the investment landscape, as investors become more aware of the importance of raw materials in supporting global economic growth.
Christopher Gannatti, Head of Research for WisdomTree in Europe says: “We are seeing greater demand from investors for broad exposure to this asset class as understanding of its uncorrelated risk contribution has increased. Commodities tend to have a positive correlation with inflation which may be attractive in today’s environment of interest rate increases and suitably diversified broad commodity exposure can help to mitigate specific risks associated with single commodities.”