Sector Allocation Differentials
The growth and quality selection factors emphasize companies that are employing less leverage to achieve their return on equity. This often results in an under-weight in financials and utilities, and this is true of this new WisdomTree dividend growth Index. Health Care, Consumer Discretionary and Consumer Staples stocks receive greater weights in this Index, as these sectors typically have higher return-on-equity and return-on-assets metrics.
Conclusion: Growth and Quality at a Reasonable Price
WisdomTree believes currency-hedged investment strategies are growing in prominence due to shifting policy winds among global central banks. We believe the new International Hedged Dividend Growth Index represents a potential marriage of growth and quality characteristics with this added currency-hedged feature. This type of exposure represents to us an attractive holding for core allocations to developed international stocks.
Important Risks Related to this Article
Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Investments in currency involve additional special risks, such as credit risk and interest rate fluctuations. Investments focused in Europe or Japan may increase the impact of events and developments associated with those regions, which can adversely affect performance. Diversification does not eliminate the risk of experiencing investment losses.
