Adding to the growing class of low-volatility fund strategies, WisdomTree, along with Vident Financial LLC, is working on its own factors-based, risk-weighted international stock exchange traded fund.
According to an updated SEC filing, WisdomTree proposes to launch the Vident International Equity Fund (VIDI), which is unique in the sense that the filing suggests the fund could come to market without the WisdomTree moniker.
The Vident International Equity Fund will try to reflect the performance of the Vident International Equity Index, which is a rules-based, systematic strategy index comprised of developed and emerging market stocks.
Specifically, the proposed fund tries to limit exposure to country-specific risk and market turbulence. The index tracks 35 of the largest and most liquid developed and emerging market countries outside the U.S.. For each country represented, a liquidity screen is applied and at least ten companies are selected.
The countries are ranked and weighted according to other factors like economic growth and private sector productivity, valuations, corporate growth and momentum. Each country weight is capped at 10%.
This type of “intelligent” or “smart-beta” indexing methodology is a growing trend in the ETF industry as providers launch passively managed products that mimic actively managed styles. It is also interesting to note that VIDI will utilize a Vident Index, even though WisdomTree is also known for its own fundamental, factors-based indexing capabilities.
According to Morningstar, the fee-only wealth manager Ronald Blue 7 Co, which manages $7 billion in assets, is the firm behind Vident Financial LLC. Ronald Blue focuses on financial planning and estate planning.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.