Discussion 2: European Completion
The WisdomTree Europe SmallCap Dividend Index has relatively low overlap with either the WisdomTree Europe Hedged Equity Index or the Europe Dividend Growth Indexes and thus blends well with both of those Indexes from a completion standpoint.2 European small caps are often more sensitive to the local economy than large-cap companies, many of which are global exporters, Small caps also make a good potential complement in sectors and types of stocks.
Conclusion
I believe the European variant of our dividend growth methodology provides a valuable addition to the universe of indexes tracking that region’s stocks. For people who historically have appreciated a higher quality bias in their approach to U.S. equities, I believe the existence of a new option in Europe could be of particular interest. For those who think the European recovery is just getting under way, I believe this new Index should be well positioned to capitalize on the dividend growth opportunities in Europe.
1Refers to the price-to-earnings (P/E) ratio of the MSCI Europe Index measured against the P/E ratio of the S&P 500 Index, with values as of 3/31/2014.
2Based on the constituents of the WisdomTree Europe Dividend Growth, Europe Hedged Equity and Europe SmallCap Dividend Indexes as of 3/31/2014.
Important Risks Related to this Article
Investments focused in Europe are increasing the impact of events and developments associated with the region, which can adversely affect performance. 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. Investments focusing on certain sectors and/or smaller companies increase their vulnerability to any single economic or regulatory development. This may result in greater share price volatility.