WisdomTree Launches European ETF Platform with First Four UCITS ETFs on the London Stock Exchange
Friday 24th October '14
Nik Bienkowski, Co-CEO
Leading Provider of Smart Beta ETFs Lists Four Dividend-Weighted Funds
London, 24 October 2014: WisdomTree, an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor, pioneer of dividend-weighted ETFs, today announced the launch of its European UCITS ETF platform, which are listed on the London Stock Exchange (LSE). Due to increasing global demand for ‘smart beta’ exposure, WisdomTree is proud to launch its first four ETFs providing exposure to large- and small-cap U.S. and European equities.
WisdomTree’s four new ETFs are:
|Fund Name||LSE Code||TER (p.a.)|| Index
|WisdomTree Europe Equity Income UCITS ETF||EEI||0.29%||5.7%|
|WisdomTree Europe SmallCap Dividend UCITS ETF||DFE||0.38%||3.9%|
|WisdomTree US Equity Income UCITS ETF||DHS||0.29%||3.6%|
|WisdomTree US SmallCap Dividend UCITS ETF||DESE||0.38%||3.6%|
The establishment of WisdomTree’s European business marks a number of firsts for the European ETF industry. WisdomTree becomes Europe’s first ETF provider focussed on dividend-weighted ETFs and Europe’s first issuer of dividend-weighted small-cap ETFs.
WisdomTree’s UCITS ETFs started trading on the London Stock Exchange on today, 24 October, and will initially be traded in GBx, EUR and USD. The ETFs are Irish-domiciled and physically replicated, with the underlying shares being held with State Street, a global leading custodian and administrator. One of the world’s leading ETF market makers, KCG Europe, will act as market maker for the products.
WisdomTree ‘Smart Beta’ Dividend Indices
The four Funds track proprietary WisdomTree indices, most of which have been live since 2006. The indices are designed to be an alternative to market capitalisation-weighted indices, which weight stocks on price alone. We believe the major flaw with marketcapitalisation-weighted indices is that as stocks increase in price, their weight in the index increases and vice versa, as stocks decrease in price, their weight in the index decreases. As a result, an index whose weights are based on market capitalisation may overweight overvalued stocks and underweight undervalued stocks.
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 (2) 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 the 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.
WisdomTree acquisition of Boost ETP
WisdomTree Europe was established in April 2014 upon the acquisition of Boost ETP. In addition to UCITS ETFs under the WisdomTree brand, WisdomTree Europe will continue to manage and grow the Boost line up of predominately 3x short and 3x leveraged fully collateralised ETPs under the Boost brand. Boost ETPs were first launched on the London Stock Exchange in December 2012 and currently are listed on the LSE, Borsa Italiana and Deutsche Borse. Assets Under Management (AUM) are $140m with monthly on exchange trading volumes of $m.
Built on a Compelling Track-Record
A smart beta innovator, WisdomTree pioneered the concepts of fundamentally weighted ETFs and active ETFs — and is currently an industry leader in both categories. WisdomTree launched its first funds in 2006 and is currently the fifth largest ETF provider in the US with approx. $33.5 billion in AUM. Globally, WisdomTree is currently the eighth largest ETP provider with strategies spanning a wide range of asset classes and countries around the world. WisdomTree is the only independent, publicly traded asset manager focused exclusively on the ETP market. WisdomTree is headquartered in New York and its common stock is listed on the Nasdaq Global Select Market (symbol: WETF). WisdomTree approaches Europe with the same core focus: bringing innovation and differentiated investment solutions to the ETF market.
Jonathan Steinberg, CEO and President of WisdomTree Investments, Inc. said:
“WisdomTree is a proven ETF innovator and a passionate ETF industry advocate. We are excited to bring our unique ETF focus and experience to this important market, where we seek to offer differentiated investment solutions backed by a veteran management team.”
Nik Bienkowski, Co-CEO of WisdomTree Europe commented:
“We are extremely proud to be launching WisdomTree’s first UCITS ETFs in Europe. WisdomTree is founded on well-built indices, insightful research and a track record of innovation. In addition to Boost ETPs, which provide investors with a unique product set to hedge portfolios or enhance returns, WisdomTree ETFs are unique, tracking broad indices, with most backed by live track records of more than eight years."
1) Source Bloomberg, as at 30 September 2014. Dividend yields are based on last 12 months for all four of the underlying indices.
2) Source: Professor Robert Shiller, with data as of 30/9/2014.
Notes to Editors
About WisdomTree Europe Ltd
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe, including WisdomTree Europe Ltd based in London, is an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. Through WisdomTree Europe Ltd, it sponsors WisdomTree UCITS ETFs and Boost short and leverage ETPs. WisdomTree currently has approximately $33.6 billion in assets under management globally. For more information, please visit the About WisdomTree page.
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
Investment objective of WisdomTree’s four new ETFs:
The WisdomTree Europe Equity Income UCITS ETF tracks the WisdomTree Europe Equity Income Index. The Index is a fundamentally weighted Index that measures the performance of companies with high dividend yields selected from the WisdomTree DEFA Index. At the index measurement date, companies within the WisdomTree DEFA Index that are listed on one of the major stock exchanges in Europe with market capitalizations of at least $200 million and that meet additional liquidity requirements are ranked by dividend yield. Securities ranking in the highest 30% by dividend yield are selected for inclusion. Companies are weighted in the Index based on annual cash dividends paid.
The WisdomTree US Equity Income UCITS ETF tracks the WisdomTree US Equity Income Index. The Index is a fundamentally weighted index that measures the performance of companies with high dividend yields selected from the WisdomTree US Dividend Index. At the index measurement date, companies within the WisdomTree US Dividend Index with market capitalizations of at least $200 million and average daily trading volumes of at least $200,000 for the prior three months are ranked by dividend yield. Securities ranking in the highest 30% by dividend yield are selected for inclusion. The index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share. This Index was established on 31 May, 2006.
The WisdomTree Europe SmallCap Dividend UCITS ETF tracks the WisdomTree Europe SmallCap Dividend Index. The Index is a fundamentally weighted index that measures the performance of the small-capitalization segment of the European dividend-paying market. The Index is comprised of the companies that compose the bottom 25% of the market capitalization of the WisdomTree Europe Dividend Index after the 300 largest companies have been removed. Companies are weighted in the Index based on annual cash dividends paid. This Index was established on 31 May, 2006.
The WisdomTree US SmallCap Dividend UCITS ETF tracks the WisdomTree US SmallCap Dividend Index. The Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market. The Index is comprised of the companies that compose the bottom 25% of the market capitalization of the WisdomTree US Dividend Index after the 300 largest companies have been removed. The index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share. This Index was established on 31 May, 2006.