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Inside WisdomTree’s New Dividend Growth ETF

Demand for safe-haven assets peaked amid an uncertain global economic outlook and growing volatility across many asset classes. With safe-haven assets in demand, dividend has been an area to watch out for as not all income products are devoid of risks. Stocks that are hiking dividend continuously are on the other hand said to be the best bets. Meanwhile, treasury yields are also showing a downtrend. Yield on 10-year Treasury notes fell by almost 44 bps to 1.80% as of April 14, 2016. This has made investors thirstier for yields lately (read: High Dividend Sector ETFs Hitting All-Time Highs ). Meanwhile, chances of the Fed hiking rates in the near-term have also dropped significantly after the Fed Chair Janet Yellen’s dovish comments, which were further reinforced by Fed Bank of New York President William C. Dudley. Dudley said that due to uncertain outlook for the U.S. economy, a cautious and gradual approach to interest-rate increases is expected. Yield on Japan’s benchmark 10-year government bond has been hitting record lows after it slid to sub-zero for the first time in February. Bank of Japan introduced negative interest rates earlier this year following the European Central Bank (ECB) footsteps. Denmark, Sweden and Switzerland adopted similar measures. Meanwhile, in March, the ECB came up with a more intensified economic stimulus and opted for multiple rate cuts and the expansion of its quantitative easing program to boost the economy. Monthly asset purchases were raised to EUR 80 billion from 60 billion previously (read: Surprise ETF Winners & Losers Post ECB Easing ). Because of these factors, dividend ETFs have gained a lot of popularity as investors continue to search for attractive and stable yield in this ultralow rate interest environment. Probably, this is why WisdomTree recently rolled out a dividend growth ETF targeting international economies. In fact, the global footprint made the fund more attractive given the ultralow interest rate backdrop prevailing in most developed economies. Below, we have highlighted the newly launched fund – WisdomTree International Quality Dividend Growth Fund (BATS: IQDG ) . IQDG in Focus IQDG tracks the WisdomTree International Quality Dividend Growth Index, which provides exposure to dividend paying developed market companies. Index comprises 300 companies from the WisdomTree International Equity Index selected on the basis of both growth factors – long-term earnings growth expectations and quality factors – three-year historical averages for return on equity and return on assets, which are then weighted on the basis of annual cash dividends paid. The fund has a net expense ratio of 0.38%. However, the net expense ratio reflects a contractual waiver of 0.1% through July 31, 2017. As of April 13, 2016, the fund had 207 dividend-paying companies from the developed world, excluding Canada and the U.S. in its basket. The fund is well diversified with none of the stocks holding more than 4% except the top two holdings, British American Tobacco plc (NYSEMKT: BTI ) (5.3%) and Roche Holding AG ( OTCQX:RHHBY ) (4.9%). From a country perspective, U.K. takes the top spot with about 19.4% of the basket followed by Japan (14%), Switzerland (10.1%), Germany (7%) and the Netherlands (6.9%). As for a sector point of view, Consumer Staples dominates the fund with about 22.7% exposure, followed by Consumer Discretionary and Industrials with 18.7% and 16.4% allocation, respectively. Launched on April 7, the fund has already amassed $2.5 million in its asset base. The fund is up 3.5% in the last 5 days. How Could it Fit in a Portfolio? The ETF could be well suited for investors looking for higher dividend paying securities across the globe. It also offers diversification benefits. These low-risk vehicles are excellent options for investors looking to protect their portfolio in a bearish environment. With interest rates being low in most developed nations, the appeal of dividend ETFs has increased as these offer strong yields. However, investors looking for high growth may not be satisfied with this product. Additionally, changes in currency exchange rates may affect the value of the fund’s investment adversely. Competition The ETF could face competition from other dividend ETFs with a global perspective. There are quite a few international dividend ETFs which specifically target this market. Of these, the popular fund, the iShares International Select Dividend ETF (NYSEARCA: IDV ) , has a total asset base of $2.6 billion. This fund tracks the Dow Jones EPAC Select Dividend Index and trades in heavy volume of 911,000 shares per day and charges 50 bps in annual fees. Another fund targeting the international dividend market space, the SPDR S&P International Dividend ETF (NYSEARCA: DWX ) , has AUM of nearly $856.8 million and exchanges 190,000 shares a day. The fund has an expense ratio of 45 bps. Apart from these, IQDG could also face competition from the FlexShares International Quality Dividend Index ETF (NYSEARCA: IQDF ) with an asset base of $342 million and the PowerShares International Dividend Achievers Portfolio ETF (NYSEARCA: PID ) with AUM of $700.1 million. IQDG looks attractive with a lower expense ratio as compared to IDV and DWX. The fund has a chance of making a name for itself if it manages to generate returns net of fees greater than the currently available products in this ETF space. IQDG’s focus on selecting high dividend paying stocks with both quality and growth looks to be a great strategy. Link to the original post on Zacks.com Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Long-Term Underperformance Of European Active Management Continues To Play Out In The Active Vs. Passive Debate

By Daniel Ung Every six months, S&P Dow Jones Indices publishes the S&P Indices Versus Active (SPIVA®) Europe Scorecard, which seeks to compare the performance of actively managed equity funds across different categories, and in the SPIVA Europe Year-End 2015 Scorecard , we expanded it to cover more individual countries and regions. Among the new additions are Italy, the Netherlands, Poland, Spain, Switzerland, and the Nordic region, with specific data for Denmark and Sweden. This is also the first year-end report in which 10-year data is published for Europe. To access the full report, please click here and for the video summarizing the major findings of the report, please click here . Global equity markets, as measured by the S&P Global 1200 , rose 10.4% over the past one-year period, as measured in euros, which could largely be attributed to the European Central Bank’s quantitative easing program. However, this apparently positive performance masked the heightened volatility that the equity markets experienced over the course of the year, which was a consequence of anemic Chinese growth, as well as the collapse in energy and commodity prices. Compared to the S&P Europe 350 , while 68.1% of active managers outperformed the benchmark over the short run, they underperformed the benchmark over longer time horizons. 63.8% of active managers underperformed the benchmark by the end of the three-year period, 80.6% in the five-year period, and 86.3% over the 10-year period. Exhibit 1 shows the new categories highlighted in blue. As for the global, emerging market, and U.S. equity categories, actively managed funds – in both euro and pound sterling – underperformed substantially in the short term (one-year category) and in the long run (10-year category). For instance, 61.2% of global equity funds underperformed their benchmark over a one-year period, and 89.08% of funds underperformed the benchmark over a 10-year period. Disclosure: © S&P Dow Jones Indices LLC 2015. Indexology® is a trademark of S&P Dow Jones Indices LLC (SPDJI). S&P® is a trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a trademark of Dow Jones Trademark Holdings LLC, and those marks have been licensed to S&P DJI. This material is reproduced with the prior written consent of S&P DJI. For more information on S&P DJI and to see our full disclaimer, visit www.spdji.com/terms-of-use .

5 Market-Beating Broad International ETFs Of 2015

This has been a pretty rough year for the global stock market. Several China-driven offhand events causing global market rout in mid-year, growth worries in global superpowers like the Eurozone, Japan and Canada, Greek debt deal drama, the vicious cycle of oil price declines, commodity market upheaval, and finally the Fed rate hike in almost a decade kept the global markets edgy throughout the year. The impact of these events was harsh on the bourses. SPDR S&P 500 ETF (NYSEARCA: SPY ) has lost about 1% so far this year (as of December 22, 2015), Vanguard FTSE Europe ETF (NYSEARCA: VGK ) has shed about 5.1% during the same timeframe, iShares MSCI Emerging Markets (NYSEARCA: EEM ) has retreated as much as 16.9%, iShares MSCI All Country Asia ex Japan (NASDAQ: AAXJ ) has plummeted 11.5% and all-world ETF iShares MSCI ACWI (NASDAQ: ACWI ) has gone down over 4.7%. The price performance of these region-based ETFs was enough to tag 2015 as a down year for global stocks, on an average. In fact, as China devalued its currency yuan in a historic move in mid-August, there was a bloodbath in global equities. The U.S. and Asian stocks experienced a three -year low monthly performance in August. Europe saw the most horrible month since the 2011 debt debacle. Commodities crumbled to multi-year lows on demand issues and hit hard all commodity-rich nations. Still, the global market recouped some of its losses as the ECB extended its QE policy, BoJ made pro-growth changes in its accommodative policies and the Fed enacted a lift-off citing steady U.S. economic growth in the latter part of the year. These may give enough reasons to investors to look for international ETF survivors this year. For them, we have highlighted five ETFs that have gained at least 6% so far this year (as of December 22, 2015) defying the broad-based gloom. WisdomTree Intl Hedged Quality Div Growth ETF (NYSEARCA: IHDG ) While the Fed had been preparing for policy tightening the entire year and finally hiked rates, other developed economies of the world and a few emerging economies are going the opposite direction. Due to growth issues, global superpowers like Europe, Japan and Australia are presently pursuing easy money policies. As a result, stocks of these developed nations got an extra boost. Also, a currency-hedged approach was essential to set off the effect of a surging greenback. IHDG serves both aspects. Moreover, IHDG takes care of investors’ income too as the fund selects dividend-paying companies with growth features in the developed world ex U.S. and Canada. This Zacks ETF Rank #3 (Hold) ETF was up over 10% so far in 2015. SPDR SP International Consumer Staples Sector ETF (NYSEARCA: IPS ) This international consumer staples ETF has double-digit exposure in U.K., Japan and Switzerland. Other nations like France, Netherlands, Belgium also get weight in the range of 6-8%. Nestle ( OTCPK:NSRGY ) (13.58%) takes the top spot in the fund followed by Anheuser-Busch InBev (NYSE: BUD ) (5.9%) and British American Tobacco (NYSEMKT: BTI ) (5.85%). Ongoing easy policy measures and non-cyclical nature of the consumer staples sector helped the fund to endure global market shocks. IPS is up 8.8% so far this year (as of December 22, 2015). iShares MSCI EAFE Small-Cap ETF (NYSEARCA: SCZ ) This ETF targets the small cap segment of the developed market space. Small caps are considered the measure of domestic economy. These are less ruffled by global economic concerns and most importantly the surging U.S. dollar. Since cheap money available in Japan, Germany and U.K. resulted in improving consumer sentiment in those regions, this small-cap ETF emerged as a winner. SCZ is up over 7.7%. SPDR S&P International Health Care Sector ETF (NYSEARCA: IRY ) Health care is another recession-proof sector and thus remained less ruffled in the down year of 2015. The fund puts double-digit weight in Switzerland (25.44%), Japan (17.15%) and U.K. (14.30%) and Germany (10.23%). The fund is heavy on pharmaceuticals sector (74.27%) followed by Health Care Equipment & Supplies (9.45%). IRY has advanced over 7% so far this year (as of December 22, 2015). iShares MSCI EAFE Minimum Volatility (NYSEARCA: EFAV ) This fund targets the low volatility stocks of the developed equity markets, excluding the U.S. and Canada. In terms of country profile, Japan and United Kingdom take the top two spots at 28.5% and 24.2%, respectively, followed by Switzerland (10.43%). It is slightly tilted toward financials at 21.7%, closely followed by consumer staples (16.8%), health care (15.9%), industrials (11.1%) and consumer discretionary (10.6%). The fund is up 6.5% so far this year (as of December 22, 2015). The fund has a Zacks ETF Rank #3 (Hold) with a low risk outlook. Original Post