ETF group that Donald Trump could make great again

The election of Donald Trump has made the American dollar great again, but while it has jumped almost 4 per cent since election night to 13-year highs, investors could have made 54 per cent by buying one stock whose fortunes are particularly tied to the US currency.

Investors are likely to continue casting around for ways to play the greenback; the “year ahead” pieces pouring in from strategists and other prognosticators are almost all predicting further strength in the US currency in 2017.

With these headwinds, a stronger-dollar consensus underpins many market predictions for 2017. Chief among these predictions is that emerging markets will be under pressure, with US investors finding it more lucrative to keep their money at home.

For a really leveraged play on the dollar, however, there is little to match shares in WisdomTree, the Nasdaq-listed asset management company that specialises in exchange traded funds. This is the stock that rose 54 per cent since the election, yet it still sits 27 per cent below its level a year ago.

WisdomTree has been working hard to become a more diversified asset manager, but the growth of its US equity funds and its expansion overseas has been swamped by the performance of its currency-hedged funds. Company-wide assets under management have fallen from just under $60bn a year ago to $40bn today.

The dramatic share price reaction since the election reflects optimism that investors will quickly resume the use of WisdomTree’s two flagships, as an easy way to get exposure to the Japanese and European markets without risking having their profits eroded by the strong dollar. The early signs are good: the assets in the two ETFs bottomed on November 9, one day after Mr Trump’s victory, and have been ticking up almost daily ever since.

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