WisdomTree Makes 2 Passive ETFs Active

October 26, 2018

WisdomTree has completed the conversion of two of its emerging market smart-beta ETFs from passive indexes to active management.

According to a press release dated yesterday, the WisdomTree Emerging Markets Consumer Growth Fund (EMCG) and the WisdomTree Emerging Markets Dividend Growth Fund (DGRE) will now be actively managed (read: "2 Index ETFs To Become Active").

However, the funds' names, tickers and expense ratios will remain unchanged. Currently, EMCG and DGRE both charge 0.32%, making them among the cheaper emerging markets and smart-beta ETF options.

"While EMCG and DGRE will no longer track an index, the spirit of these funds will remain the same," said Jeremy Schwartz, WisdomTree’s director of research, in the press release announcing the change. "Changing the implementation of the strategy to a transparent, actively managed process has the potential to mitigate risk and result in stronger returns over time."

EMCG, which is a play on the growing consumer class in emerging markets, selects emerging market stocks based on fundamental factors, such as earnings growth, return on equity and earnings yield. Then it weights those holdings based on annual net income. 

DGRE, meanwhile, tracks a dividend-weighted index of high-yielding emerging markets stocks that exhibit strong financial fundamentals and growth prospects.

Both ETFs have been around since 2013, but neither has accrued much in the way of assets. Currently, EMCG has $31.7 million in assets under management, while DGRE has $68.3 million.

Contact Lara Crigger at [email protected]

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