On Thursday, WisdomTree Investments, Inc. (NASDAQ: WETF), an exchange traded fund (ETF) and exchange-traded product (ETP) sponsor and asset manager, announced the launch of the WisdomTree U.S. Growth & Momentum Fund (WGRO) on the NASDAQ stock exchange. WGRO seeks to track the price and yield performance, before fees and expenses, of the O’Neil Growth Index™, and has an expense ratio of 0.55%.
“An aggressive-growth investment strategy may come with significantly higher volatility,” explained Jeremy Schwartz, Global Head of Research at WisdomTree. “The WisdomTree U.S. Growth & Momentum Fund aims to solve this challenge by seeking to capture the upside of an aggressive growth portfolio while attempting to limit the downside risk after the market tops and corrects, which is historically inherent with growth investing. We wanted to offer a strategy built for investor allocations to mid- and large-capitalization U.S. growth stocks to build their portfolios further.”
WisdomTree is utilizing a proprietary index created by O’Neil Global Advisors, Inc. in its construction of the WisdomTree U.S. Growth & Momentum Fund, which aims to improve the timing of entry points during small pullbacks and avoid holding stocks that are extended. In seeking to track the O’Neil Growth Index, WGRO is anticipated to focus on positive relative strength and, as a result, does not plan to remain invested in sectors and industries that are significantly lagging the market. Instead, WGRO anticipates investing in sectors, industries, and stocks that can be viewed as market leaders.
“The key advantage of the O’Neil Growth Index is its use of proprietary technical factors, which seeks to avoid stocks that are extended and have been deemed by the factors as being likely to correct or fall in price,” said Randy Watts, Chief Investment Officer at O’Neil Global Advisors. “We’re excited to be collaborating with WisdomTree to offer investors seeking an aggressive investment strategy and offer investors an investable portfolio that accesses our innovative O’Neil Growth Index.”
WGRO: What’s Under the Hood?
WisdomTree’s U.S. Growth & Momentum Fund utilizes O’Neil’s Growth Index in its selection process, which includes the top 50 to 100 stocks as determined by each company’s score, across the following four factors:
- The pullback factor seeks to increase exposure to stable growth names with positive recent price action.
- The volatility factor seeks to lower the long-term visibility of the portfolio and slightly increase the exposure to large cap and value stocks.
- The Datagraph Rating™ seeks to increase exposure to companies with growth characteristics and is a proprietary O’Neil rating based on a formula that assigns weights to various factors.
- The hotness factor seeks to decrease exposure to companies likely to have high speculative interest by measuring the stocks’ recent change in volume compared with historical averages.
“For the last decade, momentum was synonymous with growth investing, but due to value stock performance over the last six months, many momentum strategies now have a significant value bent to their underlying portfolios, impacting investors who allocate to value on a standalone basis already.”
“WGRO is expected to have a consistent growth orientation in constructing its portfolio due to the O’Neil proprietary factors incorporated into its Growth Index, including the Datagraph Rating in particular,” Schwartz added.
For more information, visit www.wisdomtree.com.