WisdomTree DEFA Fund (DWM)

All Comments on DWM

  • commenter
    David
    Jackson
    Dec 15 04:14 AM
    My Website
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Thanks Luciano! This would be an interesting thing for, say Roger Nusbaum or J.D Steinhilber, to look at: the performance of ETFs and ETF portfolios versus the hedge fund indexes. Guys???? :-) Reply
  • commenter
    steinie
    Dec 14 06:41 PM
    My Website
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Luciano,

    I have two questions:

    Given your firm's focus on dividends, I would think you would be interested in income oriented equity securities such as REITs, energy MLPs, and RIC BDCs such as Allied Capital and the like. Is there a reason why you would not consider launching products in these areas. Do you have any thoughts on why the ETF marketplace has not created any products using energy MLPs, which along with REITs, have been one of the top performing asset classes over the past ten years?

    How does your dividend oriented philosophy account for the fact that corporations have increasingly used stock buybacks rather than dividend payments as a means of returning capital to shareholders. Doesn't the huge volume of share repurchase activity tend to distort the dividend yield measure of valuation?

    Thanks,

    J.D. Steinhilber
    AgileInvesting.com     Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 04:03 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Steve, this is a good question.

    Regrettably, I need to sign off now and head out to some meetings. I will be back in my office tomorrow afternoon to address more questions.

    Best to all of you who are participating in this discussion,
    Luciano     Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 03:57 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Geoff,

    The first 20 WisdomTree ETFs were launched on June 16th. Performance information for those funds are updated monthly and are available at wisdomtree.com. Information on the historical performance of the WisdomTree indexes since June 1, 2006, and information on the hypothetical performance of the WisdomTree indexes prior to June 1, 2006, is also available at wisdomtree.com.     Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 03:46 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Sorry guys, that’s outside the scope of our forum today and I will not comment. Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 03:37 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    As many of you may know, WisdomTree Investments’ largest shareholder, Michael Steinhardt, was a legendary hedge fund manager. WisdomTree choose this path because we wanted to bring our investment approach to the widest possible audience through what we believe is the most investor-friendly structure: the exchange traded fund. With respect to the second part of your second question, perhaps one of the bloggers out there, better versed in such matters than I, can provide you an answer. Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 03:26 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    David, I didn't realize this was you again, but here is another answer.

    On our website, we have real-time total return data for both our international ETFs and our international indexes. This information gives you a basis to compare non-U.S. dividend-paying stocks to comparable cap-weighted international indexes since our indexes and ETFs were launched in June, 2006. WisdomTree also displays information on its website that provides data to make comparisons over longer time periods. By the way, Dow Jones Indexes and MSCI have also published materials showing how portfolios of non-US. dividend-paying companies would have performed compared to relevant cap-weighted indexes on an annualized basis over longer-time periods. I believe the answer to the thrust of your question can be found by examining these different materials.     Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 03:08 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    SW. Let me respond to the shorter-answer questions first and come back to questions 3 and 4 later.

    As of yesterday's close, assets under management for WisdomTree ETFs were approximately $1.35 billion. By the way, assets under management for each WisdomTree fund are disclosed daily on our website.

    Regarding fees, the expense ratio for our domestic equity ETFs is 28 to 38 basis points, and 48 to 58 basis points for our international equity ETFs. As you probably know, commission charges also apply when you buy or sell ETFs on an exchange.

    At WisdomTree, we also have the ability to provide separately managed accounts for institutional and other qualified investors, or to license our IP to pension fund managers who wish to manage their portfolios “in house” based on WisdomTree’s proprietary indexes. Fee schedules for our non-ETF products vary; more information on these other options is available by going to the home page on WisdomTree.com and clicking through on the tab at the top entitled, "separate accounts.”     Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 02:50 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Matthew, in response to your second question:

    Over the past several years, there have been a series of fundamentally weighted ETFs introduced into the market place, beginning in 2003 with DVY, which was designed to track a new Dow Jones index, The Dow Jones Select Dividend Index. This dividend-based index ranks and selects companies based on certain fundamental ratios and then weights components in the index based on dividend per share, a fundamental metric. FTSE actually has two families of fundamentally weighted indexes and, in our view, we share common ground conceptually on why you would want to choose the fundamentally weighted approach. With respect to the specific sector funds you mentioned, I really don’t know a lot about them. Maybe some of you bloggers could educate me as to how specifically the stocks are selected for the underlying index and how specifically the components are weighted. There are now more than 100 domestic sector ETFs in the U.S. WisdomTree’s fundamentally weighted international sector funds exist in a much less crowded space. In October 2006, WisdomTree brought to market the first pure international sector ETFs listed in the U.S.     Reply
  • commenter
    Miles Weiss
    Dec 14 02:39 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Luciano,
    I am impressed by the way all the WisdomTree ETF's are responding based on the Monthly Performance report of Nov 30. Do you see these returns continuong steadily month to month or will the variations be dramatic month to month.

    In specific would DBU, as a utility fund, be a constant performer?
    Miles     Reply
  • commenter
    David
    Jackson
    Dec 14 02:17 PM
    My Website
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Luciano, just a quick thank you for the care with which you're answering these questions. It's amazing to see such an intelligent and open discussion -- far more interesting and thoughtful than most interviews allow for. Thank you again! Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 02:14 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Matthew, in response to your first question:

    Suitability depends on the client and the investment objectives that need to be met. WisdomTree’s goal has always been to create viable alternatives to cap-weighted indexes in every major market segment and across major regions of the developed world. If we look at how allocations are made in the real world -- by financial advisors, consultants and investment committees -- some of the greatest pools of capital are benchmarked to indexes in the US. large-cap space. WisdomTree has four domestic funds that are predominantly largecap (DTD, DLN, DHS, and DTN). They meet different needs depending on how much selection risk one wants to take and whether the goal is to gain large-cap exposure with generally lower historic betas, or the goal is to provide a fundamental alternative to large-cap capitalization-weighte... indexes. If you had an interest in the international small-cap space, you had no U.S.-listed ETFs to choose from until WisdomTree came to town. Now you have three choices from WisdomTree -- DLS, DFE and DFJ – including ETFs that give exposure to Japanese small-cap and European small-cap companies. We believe WisdomTree has tools that investors can use to create global dividend-based portfolios. At WisdomTree, we don’t give investment advice. We just provide fundamentally-weighted alternatives to traditional cap-weighted index funds.     Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 01:43 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Roger, it was nice to meet you in Phoenix. I enjoy reading your insights on the ETF industry and congratulate you for the following you are developing via your blogging on Seeking Alpha.

    The reason Total SA (FP FP) is not in the top ten holdings for DEW, the WisdomTree Europe High-Yielding Equity Fund, is that Total SA is not in DEW’s underlying Index: the WisdomTree Europe High-Yielding Equity Index (WTEHYE). The company Total SA did not qualify for inclusion in WTEHYE, which is a sub-set of the WisdomTree Europe Dividend Index (WTEDI). WTEDI serves as the underlying index for DEB, the WisdomTree Europe Total Dividend Fund.

    All of our high-yielding equity indexes are created by ranking the stocks within WisdomTree’s "broad market indexes” by dividend yield, and then selecting the top 30% of the companies based on dividend yield that meet our other inclusion requirements (there is a higher threshold for market capitalization and liquidity). Then these indexes are weighted once a year by the magnitude of the cash dividends companies pay – so larger companies with more shares outstanding, paying greater aggregate dividends, typically get larger weights. The reason Lloyds TSB Group (LLOY LN) has a different rank is for the same reason. Some of the companies that paid larger cash dividends than Lloyd’s did not qualify for inclusion in the high-yielding subset because their dividend yields were not high enough at the annual screening point. One final point: these rankings and weightings reflect dividend yields and company contributions to the dividend streams of their respective regions at a snapshot in time, once a year. To limit turnover, weights during the year are not adjusted for increases or decreases in dividend per share, or for share issuances or share buybacks, so the weights during the year will change based on fluctuations in the stock price of the individual components. The beauty of dividend weighting is that it incorporates into the index a rules-based mechanism that adjusts annually, for what we believe, is relative value. In our research we were able to quantify the impact such dividend weighting had on overall returns and volatility compared to comparable cap-weighted indexes. Our research indicated to us what the characteristics of these indexes would have been had they existed, in every part of the developed world and in every major market cap segment, before we ever launched an ETF to track them.

    The performance and characteristics of the WisdomTree Indexes prior to June 1, 2006 is based on a back test, i.e. calculations of how an index might have performed in the past had it existed. Hypothetical back tested performance has inherent limitations and is not indicative of future results. Index performance data assumes reinvestments of dividends and does not reflect management fees, transaction costs or other expenses. You cannot invest directly in an index.

    For more information on WisdomTree index construction and current constituents, please visit wisdomtree.com. We have updated information on both the indexes and the WisdomTree ETFs.     Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 01:15 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    David, this is an important question but it is theoretical and speculative and it does not lend itself to a sound-byte answer. I just can’t answer questions about what “should” happen in the future. All I can do is relay what we and others have observed as having happened – based on either real-time index calculations or in simulations based on data of past market performance. If you are interested in why dividends play such a vital role in the total return of stocks, I would recommend Professor Jeremy Siegel’s latest book, The Future For Investors. In my view, several of the chapters in the book on dividends are excellent. In the interest of full disclosure, Professor Siegel is a board member of WisdomTree Investments and consults to WisdomTree in his capacity as Senior Investment Strategy Advisor. Reply
  • commenter
    Luciano
    Siracusano
    Dec 14 01:09 PM
    Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management [view article]
    Hi guys, I'm back. David, now to your second question:

    This question of expense ratios and ETFs is really very interesting, as I think it captures how the ETF industry has been evolving. When BGI, State Street and Vanguard launched their domestic ETFs tracking traditional cap-weighted indexes, their expense ratios for domestic ETFs were really quite low – reinforcing one of the great strengths of ETFs. These were liquid, transparent, low-cost ways to own large segments of the market in a single fund that trades on a stock exchange like a stock. Over the past few years, new ETFs have emerged – ones that tracked indexes based on less transparent indexes, what some have called “black box” selection and weighting strategies. These ETFs have generally carried higher expense ratios and track more narrowly focused areas of the market. Some contain special bells and whistles. WisdomTree bucked this trend by creating ETFs that cover broad segments of both domestic and international markets, that are based on transparent, fundamentally-weighted indexes, and that we believe are priced competitively: 28 to 38 basis points domestically, and 48 to 58 basis points internationally.

    Where is the ETF industry headed? I think ETFs will ultimately mirror what is happening in the indexing industry. So if the great debate going forward in the world of indexing is not “active versus passive, “ but “passive versus passive,” then I would expect the ETF industry to ultimately end up with cap-weighted ETF providers on one side and fundamentally-weighted ETF providers on the other. WisdomTree is at the heart of that debate and I trust you know on which side we stand.     Reply
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