In his 2018 letter to Berkshire Hathaway shareholders, Buffett wrote that stock performance converges with business performance over time if the original purchase price is not excessive. Jeremy Schwartz and Kara Marciscano make the case for our quality dividend growth strategy, with aggregate profitability that is comparable to Berkshire’s equity portfolio and a valuation below the S&P 500.
We think investors should consider maintaining exposure to developed international equities in the current market environment. Currency hedging and small caps could be considered two important themes to help investors generate excess returns and limit downside risk across developed international markets.
After significant relative outperformance in the U.S. equity market like we have seen over the past decade, some investors begin to question the merits of maintaining their diversification. With the outperformance and the valuation advantage that now exists in developed international equities, we believe now may be the time to maintain, or even add to, a global portfolio.
In December 2013, WisdomTree added a novel approach to its stable of international dividend-focused Indexes with the launch of the WisdomTree International Hedged Quality Dividend Growth Index. What has driven this Index to outperform its peers since inception?
Most people think about tax planning just at year-end, but anytime there are significant pullbacks in the market, we think there is an opportunity to rotate into other strategies and book a loss.
Jeremy J Siegel
Senior Investment Strategy Advisor
CEO of WisdomTree
Jeremy Schwartz, CFA
Executive Vice President, Global Head of Research
Christopher Gannatti, CFA
Head of Research, Europe
Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January of 2014, he was promoted to Associate Director of Research where he was responsible to lead different groups of analysts and strategists within the broader Research team at WisdomTree. In February of 2018, Christopher was promoted to Head of Research, Europe, where he will be based out of WisdomTree’s London office and will be responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. He received his MBA in Quantitative Finance, Accounting, and Economics from NYU’s Stern School of Business in 2010, and he received his bachelor’s degree from Colgate University in Economics in 2006. Christopher is a holder of the Chartered Financial Analyst designation.
Head of Fixed Income Strategy
Tripp Zimmerman, CFA
Head of Fixed Income & Currency
Associate Director, Asset Allocation and Modern Alpha
Head of Capital Markets
Associate Director of Capital Markets
Head of Europe
Joseph Tenaglia, CFA
Associate Director, Asset Allocation
Kara Marciscano, CFA
Jianing Wu joined WisdomTree as a Research Analyst in October 2018. She is responsible for analyzing market trends and helping support WisdomTree’s research efforts. Previously, Jianing completed internships and projects at Geode Capital, Starwint Capital, and Invesco Great Wall Fund Management with a focus in quantitative research. Jianing received her M.S in Finance from the Massachusetts Institute of Technology. She graduated with honors from Boston College with degrees in Mathematics and Philosophy.
Jeff Weniger, CFA
Director, Asset Allocation
Alejandro Saltiel, CFA
Associate Director of Modern Alpha
Alejandro Saltiel joined WisdomTree as a Quantitative Research Analyst in May 2017. He is responsible for quantitative research on WisdomTree’s products and global equity markets. Prior to joining WisdomTree, Alejandro worked at HSBC Asset Management’s Mexico City office as Portfolio Manager for multi-asset mutual funds. He started his career working at a boutique hedge fund that specialized on trading options on sector-levered ETFs. Alejandro received his Master’s in Financial Engineering degree from Columbia University in 2017 and a Bachelor’s in Engineering degree from the Instituto Tecnológico Autónomo de México (ITAM) in 2010. He is a holder of the Chartered Financial Analyst designation.
Matt Wagner, CFA
Modern Alpha Analyst
Matt Wagner joined WisdomTree in May 2017 as a member of the Research team. He is responsible for research on WisdomTree’s products and communicating the firm’s views on the markets. Matt started his career at Morgan Stanley, working as an analyst in Treasury Capital Markets from 2015 to 2017 where he focused on unsecured funding planning, execution and risk management. Matt graduated from Boston College in 2015 with a B.A. in International Studies with a concentration in Economics. Matt is a holder of the Chartered Financial Analyst designation.
We’ve written a lot recently about what it means to focus on quality in equity investments. The third quarter of 2015—with the volatility that it brought along with it—provided what we think was an interesting short period to illustrate the benefits of a quality approach.
The change in monetary stimulus around the world is causing rapid adoption of currency hedged strategies. And WisdomTree’s broad-based International Hedged Dividend Growth Index (WTIDGH) is building positive momentum.
A big story of the last two years has been the strength of the U.S. dollar and the change in central bank policy prescriptions that led to it. This move has caused strong reverberations across foreign stock funds that are exposed to foreign currency risk.
To help provide a broad-based benchmark to this concept of currency-hedged allocations, WisdomTree created an Index of developed world dividend growth stocks that we believe are attractive candidates for a currency-hedged strategy.
When investors allocate to foreign stocks, they implicitly assume a secondary currency exposure on top of their local equity market returns. One of the arguments we often hear is that currencies offer no expected return in the long run; their returns are assumed to ultimately be a wash based on a concept called purchasing power parity (PPP).