Daily ETF Watch: 1st Go-Anywhere Bond Fund

WisdomTree rolls out the ETF industry’s first unconstrained bond fund.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

WisdomTree launched the market’s first unconstrained bond ETF today on the Nasdaq. The actively managed WisdomTree Western Asset Unconstrained Bond Fund (UBND) can essentially invest anywhere in the fixed-income space regardless of the type of security or its rating. The ETF has very few restrictions and guidelines, and can even go short.

 

The prospectus notes that the fund can invest up to 25 percent of its portfolio in credit-linked notes, and says that the fund will “generally” limit its allocation to any single country to 30 percent. Single issuers will be capped at 10 percent.

 

UBND targets an average effective duration to between negative five years and 10 years.

 

The fund comes with an expense ratio of 0.55 percent, or $55 for each $10,000 invested.

 

WisdomTree Plans Hedged/Unhedged Pairs

WisdomTree is planning to launch two pairs of ETFs, each representing a hedged and unhedged version of the same index. One pair provides exposure to the global small-cap space, while the other targets the global companies exhibiting “quality dividend growth.”

 

The marketing of pairs is the latest sign ETF sponsors are only too happy to provide investors with the tools they need to either hedge or not hedge the currency exposure to the same strategies. Views on exactly how to hedge currency exposure and the decision to let investors decide for themselves is increasingly becoming the norm since currency hedging took the ETF world by storm two years ago.

 

The WisdomTree Global SmallCap Dividend Index targets dividend-paying small-cap companies in developed as well as emerging markets, and weights them within their respective geographic regions by dividends paid, according to the prospectuses. The currency-hedged fund will apply a one-month currency forward rate to hedge away currency fluctuations against the U.S. dollar. The two funds tracking the index are as follows:

 

Meanwhile, the WisdomTree Global Quality Dividend Growth Index also targets developed and emerging markets. It covers 300 companies that are selected based on a combination of earnings growth expectations, return on equity and return on assets, and are weighted within their respective geographic regions by dividends paid. The funds are as follows:

 

The filings did not include expense ratios or tickers.

 

 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.