When the VIX hit 36 at the end of December 2018, the last thing we would have thought would be that risk-on strategies might have a strong month in January 2019. But that’s exactly what happened.
Mid-cap value has been one of the most consistently performing asset classes over the last 25 years. With a market segment that is often overlooked, and in an investment style that the markets seem to hate, mid-cap value may be the most-hipster equity-style box out there.
It was easy to forget how downside pain in equities could feel given robust growth over the last decade, and especially the two years ending January 2018. However, volatility is back. Jeremy Schwartz explains how to prepare your equity portfolio in 2019.
The Fed released its inaugural financial stability report on November 28, which identified the main vulnerabilities in the financial system. One focus was significant build-up in debt among U.S. corporations. We believe you can avoid these corporations with our small-cap strategies.
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.
WisdomTree has been a pioneer in two important categories of indexes and exchange-traded funds: small-cap equities and currency-hedged equities. With the launch of the WisdomTree Global SmallCap Dividend Index (WTGS) and the WisdomTree Global Hedged SmallCap Dividend Index (WTGSH), WisdomTree combines our innovative small-cap dividend methodology into a global index and also allows the choice to currency hedge.
One of the big trends in the exchange-traded fund (ETF) industry has been this year’s flow of new money into developed world equity ETFs, both unhedged and currency hedged. WisdomTree estimates that nearly $100 billion of this year’s $171 billion in ETF industry inflows cascaded into these funds through the end of October.
WisdomTree has been constructing fundamental rules-based indexes for almost a decade on the premise that markets are not always efficient, and so stock price may not be the best determinant of fair value. Consequently, we believe that screening various markets by their fundamentals and reweighting those securities by their fundamentals, instead of price, on a periodic basis can potentially improve risk-adjusted returns.
We continue to see proliferation of the term “smart beta”. A wide array of smart beta indexes are starting to have live performance histories greater than five years, and we evaluated the WisdomTree Indexes focused on small-cap equity markets with at least that much history.
Many investors wrongly assume that small-cap companies can’t afford to pay dividends because their main focus is on growth and they need to reinvest their earnings to support that growth. We feel that looking at just the Russell 2000 Index as a proxy for all small caps incorrectly stereotypes all small-cap companies.