Exchange traded funds (ETFs) have become highly regarded for inclusion in investor portfolios — and for the same reasons, they make sense for 401(k) accounts. ETFs offer easy-to-implement, fully transparent, high-quality investment performance, covering the full range of risk and style categories, and are available at significantly lower expenses than most traditional mutual funds.
And now WisdomTree offers you a comprehensive service platform — and a choice of pre-built and customizable solutions — that make it easy to create complete a 401(k) ETF program to meet your clients’ investment objectives.
The Benefits of a 401(k) ETF Program
Your goal with a 401(k) plan is to create an effective long-term investment strategy for your clients. ETFs when used within 401(k) portfolios offer several strengths that make them particularly well suited for this purpose:
- Low-cost – ETFs are low cost tools for creating asset allocation portfolios and can often significantly lower costs to 401(k) participants.
- Fully Transparent – ETFs hold underlying securities on a completely transparent basis. They have no 12b-1 fee structure so they are fee transparent, and are entirely suited to the requirement of complete fee disclosure.
- Flexible – To achieve additional diversification, ETF portfolios can be easily combined with other investment options such as low cost actively managed mutual funds.
- Omnibus trading – ETFs can be traded on an omnibus basis in a 401(k) plan to substantially reduce or eliminate the normal trading commissions associated with their retail purchase.
But all ETFs are not created equal.
WisdomTree ETFs are ideally suited for Retirement Plans.
The majority of today’s ETFs are market cap–weighted. Which means by design, they buy more of a company’s stock as its price is going up, and sell more as it’s going down. So while common sense says “buy low, and sell high,” market cap-weighted ETFs do the opposite. To us, that’s illogical because it can lead to overweighting in overvalued stocks and underweighting in undervalued stocks.
To address the structural flaw of market cap weighting, WisdomTree ETFs weights each security in the index using dividends or earnings, instead of stock price alone. We believe this offers the potential for more profitable, long term investing with less risk. Exactly what you are looking for in a retirement plan.
In addition, WisdomTree's dividend-based funds present an especially attractive combination for retirement, offering investors the potential for income-generating yields, and relatively lower volatility.
Wisdomtree ETFs cover all major market capitalizations domestically and internationally, can be supplemented with outside mutual funds for added diversification and are competitively priced to allow for a low-cost investment expense to participants. WisdomTree offers you a choice of pre-built or fully customizable solutions.
WisdomTree ETFs are also designed to cover both domestic and international market capitalization, can be supplemented with outside mutual funds for increased diversification and are very competitively priced to allow for a low cost investment expense to participants. And only WisdomTree offers you a choice of pre-built or fully customizable solutions using ETFs.
