Top And Bottom Performers Expose Market Trends

Includes: GULF, USMF
by: WisdomTree

By Jeremy Schwartz, CFA, Director of Research

We are firm believers of full transparency and periodically share our top- and bottom-performing strategies to both uncover market trends and show potential pockets of value.

We just launched a new way to help showcase, over various time periods, how our investment solutions have performed, with an interactive feature to change time periods and display both top and bottom performers overall or just for a particular asset class.

For those investors looking for positive momentum trends, the top performers can give an idea of what strategies are standing out, while contrarians and value investors might look for the bottom end of the range to see what has come under pressure.

Top 10 Performers Year-To-Date

During this time period, a number of emerging market-focused strategies have been top performers, including high-dividend emerging markets, broad emerging market dividends and emerging market small caps. The single top-performing Fund in the WisdomTree lineup is the WisdomTree Middle East Dividend Fund (NASDAQ:GULF) - rising oil prices are supporting the regional markets, despite the fact that direct Energy sector exposure is limited in that region because the major oil companies are private.

In addition to emerging markets, we also see high-yield bonds with negative duration on the top-performers list, as well as a negative duration strategy performing well with the rise in long-term interest rates.

The WisdomTree U.S. Multifactor fund (BATS:USMF) also has shone through in 2018, with the best performance of WisdomTree equities strategies for the U.S. markets in early 2018.

Bottom Performers Year-to-Date

  • On the bottom-performers list, we see lagging strategies focused on U.S. high-dividend stocks, where rising interest rates are putting pressure on some of the stocks sensitive to interest rates, such as in the Utilities and Consumer Staples sectors.
  • Other bottom performers have been Japan-focused strategies, with the rising yen causing pressure on Japanese markets. This might be an area where valuations make this an attractive contrarian idea, particularly if you think the trends in interest rates might cause the yen's strong performance to be temporary.

10 Years of Strong Performance

This new interactive performance chart can also showcase our strong performers going back a decade. In the 10-year view of the chart below, we see at the top of our list mid- and small-cap earnings strategies. What is interesting about these mid- and small-cap earnings strategies is that valuations are in 2018 still lower than large-cap equities generally. The price-to-earnings ratios for both strategies are between 13.5x and 15x on current estimated earnings, and the lower corporate tax rates should continue to support the more local economy for U.S. midcaps and small caps.

We encourage you to use this new interactive chart to keep tabs on what investment strategies stand out over various time periods - and we look forward to showcasing further features of these tools in the near future.

Jeremy Schwartz, CFA, Director of Research

Jeremy is responsible for the WisdomTree equity index construction process and oversees research across the WisdomTree family. Prior to joining WisdomTree, Jeremy was Professor Jeremy Siegel's head research assistant and helped with the research and writing of Stocks for the Long Run and The Future for Investors. He is also co-author of the Financial Analysts Journal paper "What Happened to the Original Stocks in the S&P 500?" Jeremy is a graduate of The Wharton School of the University of Pennsylvania and currently stays involved with Wharton by hosting the Wharton Business Radio program “Behind the Markets” on SiriusXM 111. Jeremy is also a member of the CFA Society of Philadelphia.