PRESS ROOM
WisdomTree Launches Euro-hedged Energy Enhanced ETC (WNRG)
Thursday 25th February '21
WisdomTree, the exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor, today announced the launch of WisdomTree Energy Enhanced – EUR Daily Hedged (WNRG). Listed today on Börse Xetra with a management expense ratio of 0.40%.
WNRG is designed to provide exposure to the Energy commodity futures with a daily currency hedge against movements in the EUR/USD exchange rate by tracking the Optimized Roll Energy EUR-Hedged Total Return Index. The index uses an optimised roll mechanism which aims to minimise the potential losses arising from contracts in contango or maximise the benefit from contracts in backwardation.
Nitesh Shah, Director, Research, Europe, WisdomTree said, “Across energy markets we have some of the most pronounced futures curve slopes out the commodity complex. In 2020 we saw how quickly we can move from a negative slope (backwardation ) to a positive slope (contango ). The optimised approach adapts to these environments quickly by changing the contract exposure, giving it the potential to enhance returns relative to a strategy that remains fixed in one segment of the futures curve”.
Energy prices have been recovering following a deep correction in the first half of 2020. An economic recovery combined with production restraint from OPEC+ has been particularly positive for oil prices and helped prices to rebound. If this continues, energy prices may catchup with the rest of the commodity complex in 2021.
Thiemo Storz, Head of German Speaking Regions, WisdomTree: added: “Energy commodities represent a tactical opportunity for many investors. However, an optimised roll mechanism can be supportive for investors seeking a longer-term exposure to energy. Investors with strategic broad commodity allocations already consider the WisdomTree Energy Enhanced to overweight the energy sector, by providing a Euro hedged feature Euro based investors can tap into the full potential of energy price gains which can be missed if held unhedged.”
Nitesh Shah concluded: “We have seen the US Dollar weaken for in the last three quarters of 2020 and many investors expect further US Dollar weakening as US government debts rise. US Dollar depreciation is generally seen as positive for commodity prices in US Dollar terms. The Euro-Hedged feature allows investors to unlock the full potential in a US Dollar depreciating environment. Even if an investor does not have a specific view on currency direction, a hedged exposure can mitigate the uncertainty of currency fluctuations”.
WisdomTree offers the most comprehensive range of commodity ETPs in Europe, with circa $2bn in assets under management across its energy ETPs.