The recent spike in Treasury yields has caused a reevaluation of many equity strategies and an underperformance for the sectors with the highest dividend yields—typically Utilities and Telecommunication sectors. Investors should potentially look to the higher-growing and lower-yielding sectors in order to lower their portfolios’ sensitivity to potential further increases in Treasury yields.
WisdomTree has launched a family of dividend growth-oriented ETFs that include a Fund each for U.S. large caps and U.S. small caps, and we believe they are particularly well suited for a rising interest rate environment, as they tend to be more cyclically exposed and less exposed to Telecommunication and Utilities (which typically are higher-yield sectors and less dividend growth oriented).
For more information on these new ETFs, please see:
1) Large Caps: WisdomTree U.S. Dividend Growth ETF (DGRW)
2) Small Caps: WisdomTree U.S. SmallCap Dividend Growth ETF (DGRS)
Important Risks Related to this Article
Dividends are not guaranteed, and a company’s future ability to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.
Past performance is not indicative of future results. You cannot invest directly in an index. Index performance does not represent actual fund or portfolio performance. A fund or portfolio may differ significantly from the securities included in the index. Index performance assumes reinvestment of dividends but does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions could reduce returns.
There are risks associated with investing, including possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Funds focusing their investments on single sectors/and or small companies increase their vulnerability to any single economic or regulatory development. This may result in greater share price volatility. Due to the investment strategy of certain Funds, they may make higher capital gain distributions than other ETFs. Please read the Funds’ prospectus for specific details regarding the Funds’ risk profile.
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