The WisdomTree Earnings 500 Fund (NYSEArca: EPS), a smart beta alternative to cap-weighted domestic large-cap equity strategies, has a new, lower fee. The $239.85 million EPS is now charging 0.08% per year, or $8 on a $10,000 investment, down from a prior expense ratio of 0.28%.
EPS targets an earnings-weighted index that screen for positive cumulative earnings over their most recent four fiscal quarter period and assigns weights to components to reflect the proportionate share of the aggregate learning’s each company generated, so those with greater earnings have larger weights. That gives the fund value and quality tilts.
EPS, which turned 12 years old in February, tracks the WisdomTree U.S. Large Cap Index, which is fundamentally weighted.
“The index is earnings-weighted in December of each year to reflect the proportionate share of the aggregate earnings each component company has generated. Companies with greater earnings generally have larger weights in the index,” according to WisdomTree.
A Notable Fee Cut
There have been a spate of fee cuts in the ETF industry this year, but the lower fee on EPS is notable for multiple reasons. First, EPS is now one of the least expensive ETFs in the WisdomTree stable. Second, it puts the fund more inline with competitors, such as the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSEarca: GSLC).
GSLC factors include value or how attractively a stock is price relative to fundamentals like book value and free cash flow; momentum or the current up or down trend in a company stock; quality or profitability; and low volatility or the degree of fluctuation in a company’s share price over time. That ETF charges 0.09% per year.
EPS holds nearly 500 stocks, but its sector weights differ from those of the S&P 500. Technology and financial services stocks combine for more than 42% of the fund’s roster. The fund is overweight financial services stocks relative to the S&P 500, which is a common trait among value ETFs.
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