Quality Dividend Growth

Pierre Debru:

WisdomTree is first and foremost a research-driven asset manager. We aim to deliver our clients with unique, differentiated ETFs. Our flagship equity strategy, which we call Quality Dividend Growth, is leveraging the academic research, innovation, and our long experience to deliver long-term outperformance and resilience across business cycles. WisdomTree is a pioneer. We launched dividend strategy ETFs as early as 2006 and since then we have diversified our exposure and offering to clients. These strategies have gathered billions of assets over the last decades globally by combining high-quality companies and dividend-growing companies into a unique portfolio that aims to deliver long-term outperformance, but also stability. When it comes to core-equity holdings, investors tend to look for four specific characteristics. First, reliable outperformance over the long term anchored into known and proven investment principles. Second, resilience across the business cycle. Third, defensiveness in crises. And finally, an asymmetric risk profile, meaning a capacity to capture more of the upside than the downside. Investing in high-quality companies is a recognized investment strategy that a lot of successful active managers have used over the past decades. Academics have also demonstrated that focusing on those high-quality strategies has historically provided long-term outperformance in multiple geographies.

At WisdomTree, we follow academic research and we focus on profitability metrics, and we focus mostly on return on equity and return on assets. Profitable companies, as we know, are very looked after and can be quite expensive. A lot of our competitors are focusing on high-growth tech companies that don't pay a dividend. By focusing on high dividend payers inside the quality world, it allows us to deliver high-quality companies at a reasonable valuation. Many high dividend strategies tend to deliver low-quality exposure. They tend to focus on the high dividend payers of the past and, therefore, not think about the future. Quality Dividend Growth stands out because it focuses on high-quality dividend growers, meaning the dividend payers of tomorrow. That allows the strategy to deliver high dividend without sacrificing the quality exposure.