WisdomTree Investments Inc., the largest publicly traded money manager focused on exchange-traded funds, said the euro will probably slide to parity with the dollar or below.
The currency will drop as the European Central Bank adds to its monetary stimulus program as central banks in the U.S., the U.K. and Japan have done, Hector McNeil, WisdomTree’s co-chief executive officer for Europe, said in a phone interview on Wednesday. He didn’t provide a time frame.
“While quantitative easing has been successful elsewhere, it’s been no quick-fix,” McNeil said. “Once you’ve started, you end up doing more than planned.”
WisdomTree on Thursday will start offering its Europe Hedged Equity Fund, the fastest-growing ETF this year with $13.1 billion of inflows, three days after ECB Executive Board member Benoit Coeure said the bank will accelerate some of its monthly bond purchases. The fund, which has traded in the U.S. since the end of 2009, has $20.4 billion under management.
McNeil said elections in Spain, uncertainty over Greece’s future in the euro area and the U.K.’s plans to hold a referendum on European Union membership will also lead to declines in the currency.
The euro slipped 0.4 percent to 1.11 per dollar at 4:10 p.m. in London, taking losses this week to 3 percent and erasing a third of its gains since mid-March.
WisdomTree, a $61 billion New York-based exchange-traded funds provider, will trade its UCITS fund in London, Frankfurt and Milan. The index-based product, which selects export-oriented firms with high dividends, will start with $20 million to $21 million of investor capital, McNeil said. It will trade with the company’s dollar-hedged Japan equity ETF, which also begins in Europe on Thursday with about $50 million.
WisdomTree expanded into Europe last year with the purchase of a majority share in U.K.-based exchange-traded product provider Boost, which McNeil helped run. It invested $20 million in working capital.
Boost offers leveraged products including a fund that shorts German bunds for three times the capital invested.