• The Information Technology sector also saw a significant change within WTHYE; its weight was lowered by 9.2%. The sector saw significant outperformance over the period but exhibited below-average dividend growth, weakening the relationship between dividends and price. Two noticeable deletions from the Index were Microsoft and Intel, representing decreases of 5.4% and 2.9%, respectively. Between annual screening dates, Microsoft’s dividends per share increased 10.7%, but its price increased 25.4%, lowering its dividend yield by 14 bps. Intel’s dividends per share increased by 6.7%, but its price increased by 56.3%, lowering its dividend yield by 135 bps2.
Conclusion
The WisdomTree annual rebalance is a key element of the added value of WisdomTree’s Index methodology. It is at each rebalance when WisdomTree engages in a disciplined process to adjust weight based on changes in relative value as well as in the relationship between dividend growth and price growth. This process was clearly exhibited within WTHYE’s rebalance as weight shifted from the best-performing sector, Information Technology, which exhibited below-average dividend growth, toward the worst-performing sector, Energy, which displayed higher dividend growth.
For current holdings of the WisdomTree Equity Income Index, click here.
1Source: Bloomberg, from 11/30/13–11/30/14.
2Source: Bloomberg, from 11/30/13–11/30/14.