WisdomTree introduces currency-hedged global small-cap dividend ETF on BATS

Nov 19th, 2015 | By | Category: Equities

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WisdomTree, a leading provider of currency-hedged exchange-traded funds, has listed a new ETF with BATS Global Markets, a leading US exchange for the trading of ETFs. The launch is the fifth WisdomTree fund to be listed on the BATS exchange since the two officially began their partnership on 29 October 2015.

BATS exchange welcomes fifth WisdomTree ETF

Jeremy Schwartz, WisdomTree Director of Research.

The WisdomTree Global Hedged SmallCap Dividend Fund (HGSD) offers currency-hedged exposure to the firm’s fourth BATS-listed launch, the WisdomTree Global SmallCap Dividend Fund (GSD). Both funds track a global range of income-generating small-capitalisation stocks, while applying a weighting scheme to favour those firms with higher dividend streams, the US dollar cash value of annual dividends relative to the selected index.

US-based investors who are seeking income-generating equity investments may wish to investigate global opportunities given that approximately 50% of the world’s investment options reside outside the US. The WisdomTree Global Hedged SmallCap Dividend Fund provides one-ticket access to such exposure while also tilting towards small-cap stocks, a strategy that has historically returned a premium relative to traditional market cap-weighting approaches. According to WisdomTree research, the small-cap premium has been estimated at 1.9% per annum over the past 20 years; the study compared the returns on the MSCI ACWI Small-Cap Index to the returns on the MSCI ACWI Large-Cap Index.

Furthermore, small-cap firms tend to be more responsive to the dynamics of the local economies within which they operate, providing a more focused exposure of the country or region rather being overly tied to the global economy.

According to WisdomTree, international currency exposure has historically added risk and not return to globally diversified portfolios. As such, investors who are interested in adding global dividend-paying small-cap exposure on a buy-and-hold basis may be better suited to WisdomTree’s latest offering.

Jeremy Schwartz, WisdomTree Director of Research, commented: “Global dividend-paying equities can offer investors income and growth potential and downside support, but currency is typically a source of added volatility. For investors without an opinion on currency direction, currency-hedged strategies may serve as a better strategic baseline exposure for global equities. HGSD offers investors the opportunity to benefit from a broad array of global small-cap dividend payers while neutralising exposure to currency.”

As of 18 Novemeber 2015, the fund had significant country exposure to the United States (49.2%), Japan (10.7%), the United Kingdom (5.8%), Canada (5.3%), and Australia (4.0%). The major sector exposures were in financials (26.4%), industrials (20.1%), consumer discretionary (15.3%), materials (9.2%), and information technology (7.8%). The fund carries a total expense ratio of 0.43%

The four other US WisdomTree ETFs now available on BATS are:

WisdomTree Global SmallCap Dividend Fund (GSD)

WisdomTree Europe Local Recovery Fund (EZR)

WisdomTree Strong Dollar Emerging Markets Equity Fund (EMSD)

WisdomTree Global ex-US Hedged Real Estate Fund (HDRW)

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