In the conclusion to our series addressing common misconceptions about ETFs and smart beta, we touch on the myth of ETFs causing systematic issues due to their illiquidity.
Quantitative easing liquidity world average correlations have been dropping in the U.S., and we see similar patterns globally, especially in Europe and Japan. How should investors account for this when constructing their portfolios?
The third part of our four-part series addressing common misconceptions about ETFs and smart beta covers supposed data mining in smart beta.
In the first part of our series addressing common misconceptions about ETFs and smart beta, we discuss the supposed academic consensus that the only recourse for investors frustrated with active management is to turn to market capitalization-weighted index funds.
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.
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.
There have been two very important trends in the asset management and exchange-traded fund (ETF) industry WisdomTree has pioneered over the last decade: rise of smart beta, and the use of currency-hedged equities. WisdomTree believes a third new category that incorporates important elements of both trends by providing unique U.S. equity factor exposures related to currency sensitivity.
One of the key developments thus far in 2015 has been the outperformance of developed world equity markets compared to the U.S. As investors pause to reposition their portfolios—and with global interest rates likely to remain at historic lows for some time—many investors continue to search for ways to squeeze dividend income out of their equity exposure.
WisdomTree believes—and a growing body of evidence suggests—that ETFs incorporating a rules-based discipline to rebalance exposures to a fundamental metric of value can deliver additional value over ETFs that just track traditional market cap-weighted indexes. We also believe that fundamental or smart beta ETFs have the potential to outperform a majority of active managers.