MiB: Jeremy Schwartz on How to Hedge Currency Risks 

This week we sit down with Jeremy Schwartz, the director of research at WisdomTree. He is responsible for the equity index construction process and oversees research across the entire family of funds at the firm.

Prior to joining WisdomTree, Jeremy was head research assistant to Wharton finance professor Jeremy Siegel, and helped with the research and the writing of “Stocks for the Long Run” and “The Future for Investors.” He also hosts the Wharton Business Radio program “Behind the Markets” on SiriusXM 111, and is a member of the CFA Society of Philadelphia.

Schwartz tells of how meeting Professor Siegel changed his career path, leading him towards exploring newer forms of indexing and especially ETFs. Siegel, a perennial favorite of Wharton students, steered Schwartz towards his current role researching how to bring new investment concepts to investors. Schwartz takes delight in telling several amusing out of school tales about Siegel and the professor’s best friend (and polar opposite) professor Bob Shiller of Yale.

He also discusses how currency hedging in the ETF space has taken off, especially in Japan and (to a lesser degree) in the Eurozone. Original, Wisdom Tree’s Dividend-Weighted Japan fund was not especially popular. Schwartz’ great insight for overseas investors was that they were essentially making a “double decker” bet: stocks + currency. By hedging the Yen exposure (for free), investors were allowed to make a stock bet without currency risk impacting the performance. WisdomTree Japan Hedged Equity Fund (DXJ) became the first currency hedged ETF.

Some of his favorite books are referenced here.

You can stream/download the full conversation, including the podcast extras, on BloombergiTunesOvercast, and Soundcloud. Our earlier podcasts can all be found on iTunesSoundcloudOvercast and Bloomberg.

Next week, we speak with Ray Dalio of Bridgewater Associates.

 

 

 

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