WisdomTree launches leveraged asset allocation ETF on NYSE Arca

Aug 6th, 2018 | By | Category: Alternatives / Multi-Asset

WisdomTree has introduced its second asset allocation ETF with the launch of the leveraged WisdomTree 90/60 US Balanced ETF (NTSX US) on NYSE Arca.

Jeremy Schwartz, WisdomTree Director of Research.

Jeremy Schwartz, WisdomTree Director of Research.

The fund seeks to achieve higher capital efficiency than traditional balanced portfolios (typically 60% equities, 40% bonds) through the use of 1.5x leverage to create exposure equal to 90% equities and 60% bonds.

This exposure is created by investing 90% of fund assets in a basket of large-caps stocks that generally represent the performance of the 500 largest US stocks weighted by market capitalization, and 10% of assets short-term fixed income futures equivalent to 60% notional exposure.

The futures are structured to reflect a laddered portfolio of two, five, ten, and 30-year Treasury bonds with a target duration between three and eight years.

The fund managers can allow a 5% deviation from the targeted 90% equity and 60% US Treasury future allocation, rebalancing towards the target allocation if the weights move beyond this threshold.

“NTSX offers a new and disruptive approach to asset allocation, which has traditionally been through 60/40 equity/bond portfolios that tend to be highly correlated to the equity market,” said Jeremy Schwartz, WisdomTree Director of Research. “In contrast to these more traditional portfolios, NTSX seeks to provide a more efficient way for investors to deploy their capital, resulting in the potential for enhanced total returns, reduced volatility and increased tax efficiency.”

The fund has an expense ratio of 0.20%.

The other asset allocation ETF in WisdomTree’s stable is the WisdomTree Balanced Income Fund (WBAL US). This ETF-of-ETFs targets approximately a 60% allocation to income-focused equities and a 40% allocation to fixed income. It invests mainly in WisdomTree’s own ETFs tracking both DM and EM equities as well fixed income including high yield. It comes with an expense ratio of 0.35%.

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