WisdomTree, A Leading Provider of ETFs, lists Emerging Asia Equity Income UCITS ETF on the London Stock Exchange
Monday 12th October '15
Hector McNeil, Co-CEO
- WisdomTree Emerging Asia Equity Income UCITS ETF (DEMA) begins trading on the London Stock Exchange.
- DEMA tracks a dividend-weighted index, offering the potential for better risk-adjusted returns relative to traditional regional market cap-weighted benchmarks.
- The index follows an existing WisdomTree’s methodology which has over nine years of track record in the US, with the UK index being launched for the first time.The Emerging Asia Equity Income index has a historic yield of 6.1% p.a. over the past 12 months.
- WisdomTree Europe now offers three dividend weighted ETFs covering the Emerging Markets.
London, 12 October 2015: WisdomTree, an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor, announced the listing of the WisdomTree Emerging Asia Equity Income UCITS ETF (DEMA) on the London Stock Exchange today. WisdomTree UCITS ETFs are physical funds, and in the case of the Emerging Asia equity income fund, uses a physical, optimised replication methodology to track the index.
The WisdomTree Emerging Asia Equity Income Index strategy is comprised of the highest 30% of companies domiciled in Emerging Asia ranked by dividend yield. The resulting constituents are used to construct a broadly diversified exposure, with a 4.5% single stock weighting cap, a 33.3% sector cap and a 33.3% country cap combined with a unique fundamental weighting strategy based on the absolute amount of dividends paid by the companies. The methodology helps to mitigate risk and focus on the larger dividend paying countries and sectors. Academic research shows that indices weighted by dividends, or which include higher yielding companies, have tended to outperform market capitalisation indices over the long run.
Dividends are the most popular smart beta category in Europe, yet the launch of DEMA is the first Emerging Asia equity ETF in Europe to be weighted by dividends. As clients become more experienced with investing in emerging markets, they are realising that returns from investing in different emerging regions may be driven by local factors, and as a result, our clients repeatedly requested that we apply our trusted dividend methodology to Emerging Asia equity markets. DEMA is the third emerging market equity ETF on our ETF platform, with the other two being the WisdomTree Emerging Market Equity Income UCITS ETF (DEM) and the WisdomTree Emerging Market SmallCap Dividend UCITS ETF (DGSE).
Viktor Nossek, Director of Research at WisdomTree Europe had this to say:
“The WisdomTree Emerging Asia Equity Income UCITS ETF provides a balanced exposure to the highest yielding companies in the region. It has over 300 constituents and features a mid to small cap bias with close to 62.5% of the index comprised of stocks with a market capitalisation below $10bn. The strategy has a large allocation to high dividend yielding countries like China and Taiwan whilst underweighting low dividend countries such as India and South Korea. At a sector level it is overweight financials and defensives such as telecoms, energy and utilities.
The capping of individual sector and country exposures at 33.3% creates a balanced portfolio, providing risk control at different parts of the investment cycle. The low price to book and PE ratios are a reflection of how the index aims to capture value stocks whilst the historic dividend yield of 6.1% compares favourably to competing indices.”
Hector McNeil, Co-CEO of WisdomTree Europe commented on the launch:
“WisdomTree Europe is delighted to launch the WisdomTree Emerging Asia Equity Income UCITS ETF. This new ETF is Europe’s first dividend focused ETF covering emerging Asian equity markets. The index methodology is the same that underpins many existing WisdomTree ETFs and has helped the company grow to become the 5th largest ETF issuer in the US market and the 7th globally. WisdomTree’s methodology combines experience and track record, with a high yielding diversified index thereby combining an attractive yield with exposure to one of the key regions within emerging markets”.Our aim is to be the leading provider of dividend weighted ETFs in Europe”.
WisdomTree pioneered indices weighted by the Dividend Stream® - defined as the sum total of regular dividends paid in a particular index. Historically, dividends have provided a majority of the stock market’s real return over time and, unlike other factors, dividends are an objective measure which are not affected by accounting treatments. Dividends are a major factor in determining stock price and a useful measure in determining company profitability and value, rather than stock price alone. In today’s low-yield world, a dividend-weighted ETF may increase the portfolio’s trailing 12-month dividend yield and provide extra income. Each ETF seeks to distribute dividends on a quarterly basis.
Additionally, WisdomTree’s dividend indices offer a number of potential benefits: founded on experience and transparency, many of WisdomTree’s indices have live track records since 2006, broad exposure to companies in the index, and access to a different weighting methodology which brings potential diversification benefits to a portfolio when held alongside market cap-weighted assets, by potentially reducing risk, increasing returns, or both.
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Notes to Editor
About WisdomTree Europe Ltd
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