Top and Bottom Performers in Q2 2018
One of the new interactive dashboards WisdomTree created to help visualize market trends through the lens of our exchange-traded funds (ETFs) showcases top and bottom performers across multiple time periods. The snapshots below highlight a few distinct trends in the second quarter:
- Small caps: the top three best performing WisdomTree funds in the second quarter were all U.S. small-cap funds—across our earnings, dividends, and quality dividend growth methodologies.
- On the list of top performers were two mid-cap, U.S.-focused funds, both earnings and dividends, which shows how during a rising dollar environment, often one should look to smaller-cap companies over larger caps.
- Also on the top performers for the quarter were two option writing funds: RPUT, the WisdomTree CBOE Russell 2000 PutWrite Strategy Fund, and, PUTW, the WisdomTree CBOE S&P 500 PutWrite Strategy Fund. Our team has been writing about how during periods of uncertainty in which forward-looking return expectations are limited, options strategies that receive their return from collecting option premiums are very relevant, and this in many ways describes the current market environment. It is good to see them on the list of top performers, and again you see small caps outperforming large caps on the option writing front as well.
From a currency-hedged perspective, the strong dollar environment can be shown by the fact that the WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU) is up over 5%. This trend helped support both international hedged quality, which was up over 4% with the hedge in place, whereas many international funds that did not hedge were down in the second quarter.
The segment of the market on the opposite side of this strong dollar phenomenon was really the emerging market currencies. When we go to the bottom performers tab for the second half, all 10 Funds on the list are some derivative of emerging market currency risk or equity risk. Interestingly, a number of emerging market equity strategies actually declined less than just emerging market fixed income during the quarter, showing that equities were more resilient during this emerging market sell-off than fixed income, and a lot of the downside came from the currency moves.
We encourage you to use this dashboard of performance to evaluate the market dynamics and see what strategies are showing either positive momentum or negative momentum to help supplement your screening for new opportunities in your portfolio—whether you want to shop for value and poor momentum or the momentum breakouts.
Jeremy Schwartz has served as our Executive Vice President, Global Head of Research since November 2018 and leads WisdomTree’s investment strategy team in the construction of WisdomTree’s equity indexes, quantitative active strategies and multi-asset model portfolios. Mr. Schwartz joined WisdomTree in May 2005 as a Senior Analyst, adding to his responsibilities in February 2007 as Deputy Director of Research and thereafter, from October 2008 to October 2018, as Director of Research. Prior to joining WisdomTree, he was head research assistant for Professor Jeremy Siegel and helped with the research and writing of Stocks for the Long Run and The Future for Investors. Mr. Schwartz also is co-author of the Financial Analysts Journal paper, What Happened to the Original Stocks in the S&P 500? He received his B.S. in Economics from The Wharton School of the University of Pennsylvania and hosts the Wharton Business Radio program Behind the Markets on SiriusXM 132. Mr. Schwartz is also a member of the CFA Society of Philadelphia.