Today WisdomTree announced that they will be launching two new ETFs that seek to provide exposure to dividend-paying, small-cap companies in the U.S., developed and emerging markets.
The WisdomTree Global SmallCap Dividend Fund (BATS: GSD) and its currency-hedged version, WisdomTree Global Hedged SmallCap Dividend Fund (BATS: HGSD) will both have an expense ratio of 0.43%.
WisdomTree partnered with Bloomberg to take a look at small-cap performance versus the alternatives over a 20 year period and found surprising results…they outperform. According to data looking at the difference between MSCI ACWI Small Cap Index and the MSCI ACWI Large Cap Index between January 31st, 1995 and September 30th, 2015 the small-cap index yielded better returns.
Jeremy Schwartz, WisdomeTree Director of Research said, “Small-caps are a compelling asset class because they are typically the most sensitive to incremental changes in economic growth expectations—particularly in the region or country, in which they’re located. GSD offers investors the opportunity to access a broad cross-section of global small-cap, dividend-paying companies with the potential to capture a higher level of income,”
Dividend-paying companies have been a hot topic because of their ability to provide an alternative source of income and usually representing a company with steady, healthy growth. However most dividend ETFs on the market don’t follow small-cap companies. Schwartz went on to suggest, “When investors think of dividends, they tend to think of mature, large-cap companies, and as a result, they may wrongly overlook small-cap equities as a potential for income. However, many small-cap companies have proven business models with relatively stable earnings, and have the ability to pay out dividends to shareholders and grow them over time.”
GSD and HGSD weight their sectors heavily to financials (26.52%) and industrials (20.06%). The biggest country allocation is the US, by a wide margin, at 49.41% with Japan coming in a distant second at 10.79%. No single stock comprises more than 1% of the ETFs weighting.
This is all familiar territory for the progressive ETF issuer. They were the first to offer small-cap equities in an ETF wrapper that focused on international stocks as well ones focused on Europe, Japan, and emerging markets. That is in addition to bringing currency-hedged ETFs to market, which continues to be their bread and butter.
Additional information is available at www.wisdomtree.com.