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Passive Dividend-Weighted Approach to Small Caps Establishes Strength in Low Interest Rate Environment
Fund Launched in Company's Original Core Equity ETF Suite in June 2006
NEW YORK, Dec. 4, 2013 (GLOBE NEWSWIRE) -- WisdomTree (Nasdaq:WETF), an exchange-traded fund ("ETF") sponsor and asset manager, today announced the WisdomTree SmallCap Dividend Fund (DES) recently surpassed $1 billion in assets. DES is designed to track the WisdomTree SmallCap Dividend Index (WTSDI), a fundamentally weighted index that measures the performance of the small-capitalization segment of the U.S. dividend-paying market.
Luciano Siracusano, WisdomTree Chief Investment Strategist, commented, "By weighting the U.S., small cap market by the dividends companies pay, WisdomTree has been able to create a potential source of income for investors looking for alternatives in today's low-interest rate environment."
A Disciplined Focus on Relative Value
Market capitalization-weighted indexes typically have no mechanism to reduce weight in stocks with extended valuations, potentially building risk in an index. One solution could be to look for small cap indexes that rebalance annually back to a measure of relative value, such as cash dividends.
The underlying WisdomTree Index for DES measures the performance of the small-capitalization segment of the US dividend-paying market, and includes more than 600 companies with a combined market capitalization of more than $600 billion. The Index selects stocks from a universe of approximately 1,300 dividend-paying securities based on their market capitalization, and then weights each constituent annually to reflect the proportionate share of the aggregate cash dividends each component company pays to shareholders, based on its most recently declared dividend per share.
"There are a variety of dividend focused funds and investment strategies, but we believe DES provides the broadest exposure to the small cap segment of the U.S. dividend-paying market. For investors looking for potential dividend income in a portfolio, we believe DES could serve as a core exposure to the U.S. small cap asset class," Siracusano added.