WisdomTree Plans Factor Approach

April 23, 2018

A trio of filings from WisdomTree indicates the firm is taking a page from Vanguard’s playbook and planning to roll out actively managed factor funds. However, whereas Vanguard’s new ETF family includes only U.S. funds and only one multifactor product, the WisdomTree multifactor ETFs will offer exposure to different slices of the international market.

The funds are as follows:

The funds will use a model-based approach that incorporates valuation, quality and technical factors, according to their prospectuses. Similarly, the Vanguard factor funds use a quantitative approach.

The three ETFs will aim for low turnover but will rebalance at least quarterly. They also will generally invest in large- and midcap equities. However, they can rebalance more frequently if the managers deem it necessary, and can also include small-cap companies, the documents indicate.

Additionally, all three funds will actively implement currency hedging, with the hedge ranging from 0% to a fully hedged portfolio and determined by what the prospectus terms a “dynamic factor approach.”

The international ETF will include developed markets except for the U.S. and Canada.

WisdomTree rolled out an index-based U.S. multifactor fund last summer. The WisdomTree U.S. Multifactor ETF (USMF) incorporates exposure to the value, quality and momentum factors as well as correlations with the broad market into a composite score to select and weight companies. However, the fund has less than $6 million in assets under management after nine months of trading, so WisdomTree may be looking to take a new direction with the multifactor concept.

None of the recent filings included tickers, expense ratios or a listing exchange.

Contact Heather Bell at [email protected]

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