This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Firm Sets Launch of Dividend ETFs

New York investment management firm WisdomTree set forth plans Tuesday to become the latest company to jump on the exchange-traded fund bandwagon, announcing a new family of ETFs set to launch Friday.

The firm plans to offer 20 ETFs, including three Japan-specific funds and four funds specializing in high-yielding equities outside the U.S. The funds, set to be traded on the New York Stock Exchange, will track "fundamentally weighted" dividend indices, rather than the market cap-weighted indices often used for ETFs.

"We believe our research demonstrates that we have found a better way to index," said Jonathon Steinberg, WisdomTree CEO, on a conference call Tuesday.

Steinberg said the company is seeking to capitalize on recent research that demonstrated dividends have traditionally composed the lion's share of returns to equity investors.

Jeremy Siegel, a professor at the University of Pennsylvania's Wharton School and WisdomTree's senior investment strategist, said the indices calculate a weighting by using a company's dividend and its number of shares outstanding.

"WisdomTree's indexes are based on the premise that market cap-weighting is only justified if stocks are always priced rationally, which isn't always the case," Siegel said in a statement. "I believe WisdomTree has developed an effective strategy to exploit these mispricings."

The company used back testing -- calculating how an index might have performed if it had existed in the past -- to test the WisdomTree indices. That testing showed that the indices outperformed cap-weighted indices in "virtually all markets," WisdomTree said.

"Our historical studies were extremely favorable and we were very impressed, and we thought we could develop investment products so much better than those offered by the rest of the industry," said Siegel on the call.

He said the bubble years of the late 1990s disturbed him as overvalued tech companies became increasingly overweighted in index funds.

"I was unhappy about what was happening to my index funds," Siegel said on the call. "I didn't want to be overweighted in tech socks."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $126.44 0.00%
FB $87.28 0.00%
GOOG $523.40 0.00%
TSLA $280.02 0.00%
YHOO $39.38 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs