Market Insights

Jeremy Schwartz
Director of Research

12/02/2014

Emerging Markets and State-Owned Enterprises

We’ve seen growing interest in the degree of exposure to state owned enterprises (SOE) in various investment strategies. State owned enterprises are typically defined as companies that are either wholly or partially owned or operated by a government. Some investors feel government ownership can negatively impact the operational aspect of a company because government owned companies can be potentially influenced by a broader set of interests beyond generating profits for shareholders.

  • 11/12/2014 WisdomTree 2014 Annual Emerging Markets Rebalance

    Each year, the rebalancing process refreshes the constituent weights of WisdomTree Indexes, moving them back toward a measure of relative value. As is the case with any approach looking to take advantage of the relatively less-expensive part of an equity market, the larger uncertainty regards not whether the stocks are over- or undervalued, but rather how long it will take broader market participants to actually respond and start pushing up prices.

  • 09/24/2014 A Japan Strategist Roundtable Discussion: What's Next for Japan?

    My trip to Japan reinforced my views that Japan should be one of the most preferred destinations for global investment capital over the coming years. Japanese valuations have come down as Japanese earnings have grown more than stock prices. There is increased coordination from the government and central bank to reignite inflation and end the deflationary slump once and for all.

  • 09/17/2014 A Second Look under the Hood of International Smart Beta

    A common perception is that smart beta indexes always involve a small-cap bias in their construction. This is not true for WisdomTree’s broad-based and large-cap Indexes, which often have a larger-cap bias relative to traditional market cap-weighted indexes. We quantified in this piece the extent of that large-cap bias. We also addressed the comment that smart beta indexes inherently are value-tilted strategies.

  • 08/26/2014 Don’t Layer Currency Risk on Top of Equity Exposure

    Recently, currency-hedged equities have gained traction to neutralize the FX risk and target the local stock market returns. I have been talking to clients about currency-hedged strategies for much of the last five years, and virtually all conversations start like this: “Why should I hedge my currency risk?” But that is perhaps the wrong starting point. A more natural starting point to me is this: Why is it beneficial to add currency risk on top of local equities?

  • 08/18/2014 European Economic and Markets Recovery: A Valuation and Growth Update

    We feel investors could benefit by including exposure to European equities in a diversified portfolio over the long term. With potential economic green shoots perking up in the European landscape, the time could be ripe to consider the tools and options available across European equity indexes.

  • 07/24/2014 The 2014 Developed International Rebalance

    2013 marked a particularly strong year for equities in the developed international space, which, along with the United States, led the charge among global equity markets. Numerous macroeconomic tailwinds buoyed sentiment surrounding the developed international markets, including the eurozone returning to positive growth in the second quarter of 2013 and the Bank of Japan delivering bold monetary targets, reflecting overall accommodative monetary policies from central banks.

  • 07/08/2014 The Importance of a Relative Value Rebalance: Case Study of Europe

    Each year, WisdomTree believes it is important to reset Index weights and exposures away from what has been driven by share price performance and toward what has actually occurred in terms of fundamentals. The following analysis focuses on the WisdomTree Europe Indexes, especially in the small-cap segment.

  • 07/01/2014 Japan as Traditional Value Play: Dividends Reach New Highs

    The WisdomTree annual rebalance is a key element of the added value of WisdomTree’s Index methodology. We interpret Japan’s current valuations and double-digit dividend growth as a very positive indicator of underlying market fundamentals. We believe these fundamentals, coupled with the ongoing third-arrow reforms, should help provide a notable foundation for potential future gains.

  • 06/18/2014 Looking under the Hood of International Smart Beta

    WisdomTree has one of the broadest sets of Indexes focused on international equities that are not weighted by market capitalization. In essence, we are looking to illustrate how these Indexes with at least five years of performance history were exposed to various factors.

  • 05/08/2014 The Opportunity of European Dividend Growth

    Recently, European markets have performed strongly, with investors focusing on the economic recovery that has been building momentum. It is becoming difficult to remember that a few short years ago there was widespread debate about whether the European Monetary Union (EMU) would continue to exist.

  • 04/02/2014 Looking Under the Hood of Smart Beta

    A wide array of strategies are starting to have live performance histories greater than five years, making them eligible for consideration across a broader clientele. What are these various smart beta index strategies really doing when one looks under the hood?

  • 03/20/2014 The Forgotten Dividend Payers: Mid- and Small-Cap Equities

    When investors think of dividends, they tend to think of mature large-cap companies as the primary source, and as a result, we feel that many investors mistakenly overlook potentially attractive income options. Here we will discuss one segment of the market that often gets overlooked in the hunt for income-producing asset classes—mid- and small-cap dividend payers.

  • 02/06/2014 A Japan Strategist Roundtable Discussion

    WisdomTree has compiled a Japan Strategist roundtable—a compilation of views from three of the most widely followed Japan investment strategists. In separate one-on-one interviews, we asked these strategists to share their views on Japan’s equity markets, the economy, government initiatives and the currency.

  • 01/21/2014 Dividends: Fourth Consecutive Year of Double-Digit Growth

    WisdomTree conducts the annual rebalance of its U.S. Dividend Index family in December, with the annual screening date occurring on the last trading day of every November. This rebalance provides a plethora of data about how dividends for the U.S. equity markets have changed over time.

  • 01/08/2014 A Methodology That Takes Some Chips Off the Table After Strong Gains

    The market environment is always changing, with some years notable for their performance extremes. The November 30, 2012, to November 30, 2013, period was quite strong, and we believe that it could be beneficial to take some chips off the table redeploying them into areas that may not have performed as strongly.