For about 15 years, underweighting international equities was the right call—and most advisors made it. U.S. markets dominated, and the opportunity cost of holding overseas exposure was real and persistent. Then 2025 happened.
International equities, the MSCI EAFE Index in particular, had a breakout year. Advisors who had been structurally underweight missed the move. And while a degree of short-term volatility has crept back in—partly driven by geopolitical tension—the broader shift in how savvy allocators think about global exposure is underway. Jeff Weniger, CFA, Head of Equity Strategy at WisdomTree, has been watching the change in real time.
“On international equities, for a good 15 years or so, it was horrible, horrible relative to the S&P 500,” Weniger tells The Wealth Advisor’s Scott Martin. “Caught a huge bid in 2025, a little bit weak in the last two or three weeks on general EAFE mandates and what have you. But basically, that was where the new look was. And a lot of people are starting to weigh a lot of the changes in the global order in the way they’re doing asset allocation.”
Weniger walks through the full scope of where he sees opportunity—from Japan’s governance revolution to the often-overlooked power of currency hedging.
The World Has Changed. Have Portfolios?
The structural argument for international investment exposure isn’t just about valuations—it’s about recognizing that the global order has shifted. COVID-19 disrupted supply chains and revealed the fragility of concentrated economic dependencies. The Russian invasion of Ukraine reshuffled energy markets and defense priorities across Europe and Asia. Ongoing geopolitical friction has forced governments to spend in ways that create investable trends.
WisdomTree has built a suite of products designed to capitalize on the portfolio implications of those macro-driven adjustments, anchored by the WisdomTree GeoAlpha Opportunities Fund (ticker: GEOA). The ETF seeks to track companies positioned to benefit from geopolitical realignments, fiscal and monetary policy shifts, technological innovation, and evolving consumer behavior. Defense buildouts in Japan, Europe, and South Korea aren’t abstract headlines under GEOA’s framework—they represent identifiable, policy-driven revenue growth for companies positioned to capture the expansion.
WisdomTree’s geopolitical analyst forecasts that Japanese defense spending will roughly double between 2020 and 2030—a figure Weniger notes can feel understated given the headline pace of Japan’s military expansion. The larger takeaway for portfolio construction is that broad beta exposure to international markets may not be sufficient to capture the most compelling opportunities. Owning an MSCI EAFE Index fund gives exposure to the general direction but in a diluted, undifferentiated way that can bury the highest-conviction ideas.
When a legacy ETF tries to go thematic on defense contractors, Weniger notes, “generally speaking, you just end up with this big U.S.-centric basket—and that’s cool if you want Lockheed and the rest of the gang. But if you’re saying to yourself, ‘I want European defense, I want a pure play on that,’ or ‘I want Asian defense’—then that’s what you can actually have.”
The Hidden Cost of Broad Exposure
Here’s a math problem worth sitting with: if a portfolio has 10% allocated to an MSCI EAFE tracker fund, and Japan represents roughly 25% of EAFE, the resulting Japan exposure is about 2.5% of total equities. Japan is the world’s second-largest stock market. A 2.5% allocation to the second-largest equity market in the world is, by most measures, meaningfully underweight—and reaching even a market-weight position in Japan would require doubling that EAFE allocation.
As Weniger points out, “Only if you have 20% in that fund do you ever even reach a market weight.”
The MSCI All Country World Index sat at roughly 62% U.S. equities in early 2026—meaning everything else accounted for about 38%. Yet almost no advisor’s portfolio reflects anything close to that weighting. Weniger recounts a conversation at a recent event in Atlanta where one advisor told him she was 40% EAFE plus emerging markets—meaning she was close to global market-cap weight. His response captured just how rare that is: “Okay, then you’re the only one,” he told her, meaning she was virtually alone among the hundreds of advisors he speaks with.
The gap between where most allocations focus and where global markets are is significant—and the opportunity to close part of that discontinuity, thoughtfully, is real.
“If you’re thinking in terms of MSCI All Country World—everybody’s underweight. So, there’s still a lot of room for this capital to shift,” notes Weniger.
The advisor who missed the 2025 EAFE rally wasn’t uniquely wrong—most were on the same side of the boat. But the tide is still in favor of repositioning.
Japan: The Flagship Opportunity
WisdomTree has been constructive on Japan for years, and the current macro setup continues to support the bull case. Corporate governance reforms are ongoing, with companies increasingly focused on returning capital to shareholders through dividends and buybacks. Valuations remain at a discount to U.S. equities across multiple price-to-earnings (P/E) metrics. And fiscal expansion—particularly in defense—is creating a new demand-side stimulus with no real precedent in modern Japanese economic history, says Weniger.
The WisdomTree Japan Hedged Equity Fund (ticker: DXJ) seeks to provide broad equity exposure to Japanese dividend-paying companies with an exporter tilt, while hedging yen fluctuations relative to the U.S. dollar.
The WisdomTree Japan Opportunities Fund (ticker: OPPJ), takes a more targeted approach—incorporating Berkshire Hathaway’s strategic holdings in Japan, companies with high total shareholder yield, corporate governance improvers trading at low price-to-book ratios, and companies with exposure to geopolitical and thematic opportunities. The index underlying OPPJ also includes a variable currency hedge, ranging from 0% to 100% on a monthly basis.
Beyond the valuation discount, the governance reform story adds a layer of structural optionality that pure valuation themes might miss—and the funds are built to screen specifically for companies demonstrating meaningful improvement on that front. “You still have major discounts to the United States on four P/E multiples,” Weniger says. “You still have the call optionality on the corporate governance reforms, which are key points that we have inside these funds—they’re basically screened to capture those types of things.”
A persistent bear case for Japan had been the Japanese government bond (JGB) market, where volatility was the primary concern Weniger fielded from skeptical advisors. Recent strengthening has taken some air out of that argument. “The Japanese bond market has stabilized,” Weniger explains. “That was the number-one bear point we would hear, the counterpoint, the pushback. Ten-year JGBs have rallied in recent weeks, so it’s setting up to be a nice situation.”
Currency Hedging: The Misunderstood Edge
One of the most counterintuitive findings to come out of WisdomTree’s longer-term track records is that some currency-hedged international strategies have shown lower volatility than the S&P 500 over certain periods. For a category that many advisors still associate with added risk, that’s a meaningful data point.
Currency fluctuations add volatility to international returns—sometimes as a tailwind, often as a headwind, and nearly always as turbulence. Removing currency exposure from the equation means the underlying equity basket can be evaluated more cleanly on its own merits. When a diversified basket of several hundred European or Japanese stocks competes head-to-head with 500 U.S. names, without the forex overlay, the volatility profile can look surprisingly favorable.
“If you start forgetting about the currency because you hedged it away, surprise, surprise, your European basket or what have you basket ended up having lower volatility,” notes Weniger. “Let me just say, it stuns people.”
The current environment makes the hedging conversation especially timely. Risk-off sentiment has pushed investors toward the dollar, and the categories that have pulled back are telling.
“Certainly, we saw software-mageddon in the last several months,” Weniger says. “We still have these issues in private credit. This has been what’s off. And then you think about, well, what’s on? The dollar. Because it’s a sell-off. And what do people do? They go and grab dollars.” Currency-hedged international strategies have found some shelter in exactly that dynamic, partially offsetting equity headwinds as the dollar strengthened.
The WisdomTree Europe Hedged Equity Fund (ticker: HEDJ) seeks to provide broad Eurozone equity exposure from dividend-paying exporters while neutralizing euro fluctuations. The WisdomTree Dynamic International Equity Fund (ticker: DDWM) takes a rules-based dynamic approach—using momentum, value, carry, and interest rate differentials to determine how much currency exposure to hedge at any given time.
For advisors who want international exposure without committing to a fully hedged position, dynamic hedging aims to offer a middle path: dial down currency drag when conditions warrant and preserve currency exposure when it may be additive to returns.
Home Country Bias Is Still Running the Show
The data case for international is reasonably clear. The behavioral barrier is something else entirely.
Weniger has a sharp observation about how familiarity distorts risk perception. A 5% position in a single U.S. stock—Boeing, McDonald’s, pick one—doesn’t raise eyebrows. A 5% allocation to a diversified Japanese equity fund somehow feels more uncomfortable. The logic doesn’t hold up, but the psychology is persistent.
“You put a line item for a Japan tracker or a Germany tracker or Brazil tracker, and wow, it’s pandemonium,” Weniger says. “‘I can’t believe you’re putting 5% in Japan.’ Well, not only are you 5% in Japan or whatever it is, Korea, China, but you have hundreds of names inside the 5%. So, what exactly is more risky?”
The “nobody ever got fired buying IBM” mindset is alive and well in international allocation decisions. Familiarity breeds comfort, and comfort breeds concentration. When the question is turned around—what the actual risk is embedded in a regional fund holding hundreds of names across Japan, Korea, or Germany—Weniger keeps arriving at the same place. “How much risk is inherent in doing these baskets? And I would argue a lot less risky,” he says. “It’s just the mental bucketing that everybody engages in. And I mean, everybody seems to engage in this. It’s bizarre.”
Diversification earns appreciation only when markets become difficult. Nobody values an umbrella mid-drought. “When you get the quarterly statement and it’s all black ink, who cares about diversity? Nobody cares. It’s when there’s a lot of red ink,” Weniger says.
The recent risk-off environment—U.S. equity volatility elevated, AI and software names sold off, private credit under pressure—is a live demonstration of why structuring international exposure thoughtfully, currency hedging included, may play a stabilizing role at exactly the right moment.
The Conversation Is Already Happening
Something has shifted in the way advisors are engaging with international allocation. Weniger notes a meaningful uptick in interest—with advisors coming to WisdomTree rather than the other way around—as five-, 10-, and 15-year-old strategies mature and volatility data become harder to ignore. The conversations aren’t just about EAFE broadly; they’re increasingly specific, touching on small caps, equal-weight strategies, valuation filters, and regional precision. WisdomTree’s fundamental screening approach, which faces headwinds when large-cap U.S. growth dominates everything, is well-positioned for where the market conversation is heading.
“We’re getting more inbounds on that type of thing,” he observes. “Those usually play into our strengths because, if you’re in a fundamental house like WisdomTree and market-cap weighting of the largest asset class is not the hottest thing, then your business thrives.”
The career-risk calculus has also changed. In 2025, virtually everyone was underweight international. There’s no rival across the street who got it right and is now poaching clients on the basis of superior EAFE positioning. The opportunity to move—deliberately, with precision, and with the right tools—is open. And WisdomTree’s track records are now long enough to carry meaningful weight in those conversations. “It’s been a pretty nice 12 months or so for WisdomTree, one of the better windows I’ve seen in my career,” Weniger says.
Twenty years of history has a compounding effect on credibility that’s hard to replicate. Advisors who have owned a WisdomTree product at some point are coming back with a different kind of receptivity than they had a decade ago.
“I think it’s really starting to get to that point where, okay, now maybe I got you into the restaurant, you ordered a drink, but now it’s time for you to order a meal. I think we’re at that point here,” says Weniger. “We’re starting to see it and feel it anecdotally in the firm. So, it’s good stuff.”
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Additional Resources
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Disclosures
Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. For a prospectus or, if available, the summary prospectus containing this and other important information about the fund, call 866.909.9473 or visit WisdomTree.com/Investments. Read the prospectus or, if available, the summary prospectus carefully before investing.
There are risks associated with investing, including possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.
WisdomTree Japan Hedged Equity Fund (DXJ): The Fund focuses its investments in Japan, thereby increasing the impact of events and developments in Japan that can adversely affect performance. Derivative investments can be volatile and these investments may be less liquid than other securities, and more sensitive to the effect of varied economic conditions. As this Fund can have a high concentration in some issuers, the Fund can be adversely impacted by changes affecting those issuers. Due to the investment strategy of this Fund, it may make higher capital gain distributions than other ETFs. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit and the Fund does not attempt to outperform its Index.
WisdomTree Japan Opportunities Fund (OPPJ): The Fund focuses its investments in Japan, thereby increasing the impact of events and developments in Japan that can adversely affect performance. Derivative investments can be volatile and these investments may be less liquid than other securities, and more sensitive to the effect of varied economic conditions. As this Fund can have a high concentration in some issuers, the Fund can be adversely impacted by changes affecting those issuers. Due to the investment strategy of this Fund, it may make higher capital gain distributions than other ETFs. Dividends are not guaranteed, and a company currently paying dividends may cease paying dividends at any time. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit and the Fund does not attempt to outperform its Index. The composition of the Index is governed by an Index Committee and the Index may not perform as intended.
WisdomTree Europe Hedged Equity Fund (HEDJ): This Fund focuses its investments in Europe, thereby increasing the impact of events and developments associated with the region which can adversely affect performance. Derivative investments can be volatile and these investments may be less liquid than other securities, and more sensitive to the effect of varied economic conditions. As this Fund can have a high concentration in some issuers, the Fund can be adversely impacted by changes affecting those issuers. Due to the investment strategy of this Fund, it may make higher capital gain distributions than other ETFs. Dividends are not guaranteed, and a company currently paying dividends may cease paying dividends at any time. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit, and the Fund does not attempt to outperform its Index.
WisdomTree European Opportunities Fund (OPPE): This Fund focuses its investments in Europe, thereby the impact of events and developments associated with the region can adversely affect performance. The Fund invests in derivatives in seeking to obtain a dynamic currency hedge exposure. Derivative investments can be volatile, and these investments may be less liquid than other securities, and more sensitive to the effects of varied economic conditions. Derivatives used by the Fund may not perform as intended. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit and the Fund does not attempt to outperform its Index. The composition of the Index is governed by an Index Committee and the Index may not perform as intended. Due to the investment strategy of this Fund, it may make higher capital gain distributions than other ETFs.
WisdomTree Dynamic International Equity Fund (DDWM): The Fund invests in derivatives in seeking to obtain a dynamic currency hedge exposure. Derivative investments can be volatile, and these investments may be less liquid than other securities, and more sensitive to the effects of varied economic conditions. Derivatives used by the Fund may not perform as intended. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit, and the Fund does not attempt to outperform its Index.
Glossary:
MSCI EAFE Index: is a market cap-weighted index composed of companies representative of the developed market structure of developed countries in Europe, Australasia and Japan
MSCI All Country World Index (ACWI): a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed and emerging market countries.
S&P 500 Index: Market capitalization-weighted benchmark of 500 stocks selected by the Standard and Poor’s Index Committee designed to represent the performance of the leading industries in the United States economy.
Jeff Weniger is a registered representative of Foreside Fund Services, LLC.
WisdomTree Funds are distributed by Foreside Fund Services, LLC.
