Most recently, WisdomTree filed for two passively managed ETFs, one in the European equities space and the other in Japan. The duo also treats dividend growth as a prime condition for stock selection.
Proposed Dividend Funds in Focus
WisdomTree Europe Dividend Growth Fund and WisdomTree Japan Hedged Dividend Growth Fund look to rest on their respective geographies with the same dividend investing proposition.
The proposed Europe ETF will be tracking the WisdomTree Europe Dividend Growth Index holding 300 stocks that have the best fundamental factors like long-term earnings growth expectations, ROE, and ROA and high chances of dividend increases. In fact, the companies paying higher dollar amounts of dividends are weighted more heavily.
Geographically, the index is exposed to 15 countries namely, Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland or the United Kingdom
It should also be noted that the maximum weight of any stock is limited to 5% and maximum exposure of any sector or country is restricted at 20%, so there looks to be a solid level of diversification and a broader play in the Europe equities’ space.
The Japan ETF will be seeking to match the WisdomTree Japan Hedged Dividend Growth Index. At the same time, the planned Japan ETF intends to provide a hedge against currency fluctuations.
The index will give exposure to 300 stocks domiciled in Japan or listed on the Tokyo or Jasdaq stock exchanges. This index also follows the rule of maximum weight restriction as does the Europe index (read: Is Another Great Year Ahead for Japan ETFs?).
In terms of the currency hedge, the fund looks to enter into forward currency contracts or futures designed to partially make up for exposure to the Japanese yen. With this strategy, the fund looks to outperform when the yen is sliding, and underperform unhedged benchmarks when the situation reverses.
How Does it Fit in the Portfolio?
These proposed products could be interesting picks for yield-starved investors. High quality dividend stocks and ETFs are better options for investors seeking yields in the current environment of rock-bottom interest rates prevailing in Japan and Europe.