Pay Attention To Earnings-Weighted ETFs

WisdomTree rolled out a family branch of exchange traded funds (ETFs) fundamentally weighted on the basis of trailing earnings. So the more a company earns, the more it’s weighted in the index.

Roger Nusbaum for TheStreet reports that these ETFs actually track closer to the makeup of a traditional cap-weighted index than WisdomTree’s dividend-weighted ETFs.

WisdomTree Low P/E Fund (EZY) weights stocks with the lowest price-to-earnings ratio most heavily. The ETFs within this family are great for a broad-based portfolio. Over time, sector makeup changes so watch closely. Right now, energy dominates the four funds, with 13%-21% making up the four large-cap funds, such as the Dividend 100 Fund (DTN).