Sao Paulo, Brazil – When considering international investment opportunities, many investors look towards developed markets outside the United States. The WisdomTree International Hedged Quality Dividend Growth Fund provides a way for investors to access these markets while hedging against exchange rate fluctuations. This strategy helps to mitigate volatility and enhance returns compared to ETFs that do not implement such measures.

The outperformance of the WisdomTree International Hedged Quality Dividend Growth Fund (IHDG) can be attributed to its focus on companies in developed markets, excluding the U.S. and Canada, that pay dividends and have a growth profile. By following the WisdomTree International Quality Dividend Growth Index, IHDG selects stocks with market capitalizations of at least $1 billion and favorable earnings yields, resulting in a portfolio concentrated on nearly 250 companies with a significant presence in the healthcare sector.

In comparison to other ETFs focusing on developed markets ex-U.S., such as the iShares Currency Hedged MSCI EAFE ETF (HEFA), IHDG stands out for its concentrated portfolio and higher exposure to sectors like consumer cyclical and healthcare. This sector allocation, combined with the fund’s hedging strategy, contributes to its higher valuation metrics compared to its peers, such as price/earnings and price/book ratios.

Despite the lower valuations of developed markets outside the U.S. compared to the domestic market, investors must consider factors like demographics and political uncertainties that could impact the region’s growth prospects. Additionally, while IHDG has shown outperformance relative to unhedged ETFs over the past decade, it has not been able to keep pace with the S&P 500, reflecting the strength of the U.S. economy and stock market.

Overall, international developed markets offer a unique opportunity for diversification, allowing investors to gain exposure to different sectors and regions. While IHDG and similar ETFs provide a hedge against currency fluctuations and reduced volatility, investors should carefully assess the risks and opportunities associated with investing in these markets.