Wisdom Tree feels US Fed's positioning

By Marc Castro

Jul 18, 2013 02:16 AM EDT

Wisdom Tree Japan Hedged Equity Fund's share vaues rose by 0.54%, pegging it at US$47.98 at the close of its last trading session. Share values remained near the top of the its 52 week range, a valuation between US$30.24 and US$53.95. With the current pegged share price, the market capitalization of the firm now stands at US$10.69 billion.

The persistent speculation and rumors as to the US Federal Reserve Bank's cutbacks on growth stimulus spending has been welcome news for the US dollar. This is quite important as Japanese ETF's have benefitted when the rates in the United States increase. This phenomena was confirmed by Wisdom Tree Director for Research Jeremy Schwartz.

According to Schwartz, last June 25, JGB yields hovered around 0.87% together with ten year US bond yields around 2.58%. He also said that with the difference between the two interest rates may encourgage investors frm Japan to start mopping up US treasuries. This in turn would place pressure on the yen causing its value to decline despite the recent announcements of Japanese policymakers as to its very own quantitative easing program. 

With this as a backdrop, many ETFs would faile to neutralize currency crosses and would decline. As this occurs, the currency hedged DXJ would retain its positional value, causing the yen to further fall.

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