Professor Jeremy Siegel, WisdomTree’s Senior Investment Strategy Advisor and Professor of Finance at The Wharton School of the University of Pennsylvania, and the exchange traded funds issuer collaborated on a pair of model portfolios that recently turned a year old.
The Siegel-WisdomTree Longevity and the Siegel-WisdomTree Global Equity Model Portfolios are designed to breathe new life into the often staid 60/40 equity/fixed income portfolio split.
“The Siegel-WisdomTree Longevity Model Portfolio was designed to outperform a traditional 60/40 portfolio in a risk-conscious manner by structurally allocating more toward equities over fixed income and tilting toward factors such as dividend yield and low P/E ratios to seek higher income generation and outperformance potential,” according to WisdomTree. “The models are strategic in nature but also reflect tactical tilts based on market conditions. The strategy may include both WisdomTree and non-WisdomTree ETFs.”
The longevity model portfolio is 72% allocated to equity-based ETFs, 22% to bond ETFs and features a 6% allocation to alternative funds.
Going Global
The Siegel-WisdomTree Global Equity Model Portfolio is more aggressive as its entirely allocated to equities across 13 ETFs spanning domestic, ex-US developed and emerging markets.
“The Siegel-WisdomTree Global Equity Model Portfolio provides a diversified exposure to U.S and International stocks and tilts toward factors such as dividend yield and low P/E ratios to seek higher income generation and outperformance potential. This strategy may include both WisdomTree and non-WisdomTree ETFs,” notes WisdomTree.
The global equity model portfolio could be of particular use to advisors this year as value stocks come back into style following a lengthy slumber.
“First, the Global Equity strategy provides a diversified exposure to U.S. and International stocks and tilts toward factors such as dividend yield and low price-to-earnings (P/E) ratios to seek higher income generation and outperformance potential. Due to its valuation-driven approach and investment philosophy, the comparative equity index for benchmarking purposes is the MSCI ACWI Value Index (ACWI Value),” according to WisdomTree research.
In its first year, this model portfolio topped the MSCI ACWI Value Index by 450 basis points, a performance helped in large part by overweight allocations to domestic and emerging markets stocks.
“Value as a factor has lagged growth by a wide margin since the Models’ launch, despite a resurgence over the past three months. Nonetheless, we have seen a strong positive impact from security selection, as both the WisdomTree and non-WisdomTree fundamentally-focused ETFs have outperformed their respective regional value benchmarks,” notes the issuer.
For more on how to implement model portfolios, visit our Model Portfolio Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
