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At the end of October, WisdomTree completed the annual rebalance of its developed international dividend-weighted Indexes.

These Indexes were designed with a focus on being broadly diversified, highly correlated to the representative market-cap-weighted indexes and investable.

Each Index is tracked by a related WisdomTree ETF with more than 18 years of live track record, as shown in figure 1.

Figure 1: WisdomTree International Dividend-Weighted Indexes

The screening date for the Indexes was September 30, with implementation of the rebalance at the market close of October 30.

The WisdomTree International Equity Index (WTDFA)—a modified dividend-weighted Index tracking the performance of more than 2,000 dividend-paying companies from the developed international universe—is the parent total market Index of three market-cap segments of the international equity market as well as a high-dividend Index.

• WisdomTree International LargeCap Dividend Index (WTILDI): Comprised of the 300 largest companies ranked by market capitalization from the WisdomTree International Equity Index.
• WisdomTree International MidCap Dividend Index (WTIMDI): Comprised of the top 75% of the market capitalization of the WisdomTree International Equity Index after the 300 largest companies have been removed.
• WisdomTree International SmallCap Dividend Index (WTISDI): Comprised of the bottom 25% of the market capitalization of the WisdomTree International Equity Index after the 300 largest companies have been removed.
• WisdomTree International High Dividend Index (WTDHYE): Comprised of the top 30% of companies ranked by dividend yield from the WisdomTree International Equity Index.

Figure 2: WisdomTree International Equity Index Hierarchy

WisdomTree creates its proprietary developed international universe based on the following criteria, as illustrated in figure 2:

• Geography: Primary business activities in Japan, the 15 European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland or the United Kingdom), Israel, Australia, Hong Kong or Singapore
• Regular cash dividend payer: Pay at least $5 million in gross cash dividends
• Dividend sustainability: Companies screened out from the Index based on a proprietary composite risk screen of factors including profitability, momentum and dividend yield
• Volume: Trade at least 250,000 shares per month for each of the six months and have a median daily dollar volume of at least $100,000 for three months
• Minimum market cap: Companies must have a minimum market cap of $100 million

After running the above screens to include eligible international dividend payers in the Index, constituents are then fundamentally weighted based on regular cash dividends paid, adjusted for a propriety composite risk screen of dividend sustainability. The top holdings are shown below in figure 3.

Figure 3: Top 10 WisdomTree International Equity Index Holdings

Figure 4 demonstrates that the total market WisdomTree International Equity Index has a trailing 12-month dividend yield of 4.18%, an improvement of about 100 basis points over the MSCI EAFE Index. The 4.18% yield is more than 3x greater than the 1.25% yield of the S&P 500.

The WisdomTree International High Dividend Index has a dividend yield of almost 6%.

Figure 4: Index Trailing 12-Month Dividend Yields

In addition to higher dividend yields, the fundamentally weighted indexes also typically have lower price-to-earnings ratios relative to market-cap-weighted indexes, as seen in figure 5.

One of the deepest value cuts of the market globally is the International High Dividend Index, with a price-to-earnings ratio of 9x.

For context, the S&P 500 P/E ratio is more than 27x.

Figure 5: Index Trailing 12-Month Price-to-Earnings

For additional details on the rebalance of each of the Indexes, please go to their respective Index pages on the WisdomTree website:

• WisdomTree International Equity Index (WTDFA) (the WisdomTree International Equity Fund (DWM) seeks to track the price and yield performance, before fees and expenses, of this Index)
• WisdomTree International LargeCap Dividend Index (WTILDI) (the WisdomTree International LargeCap Dividend Fund (DOL) seeks to track the price and yield performance, before fees and expenses, of this Index)
• WisdomTree International MidCap Dividend Index (WTIMDI) (the WisdomTree International MidCap Dividend Fund (DIM) seeks to track the price and yield performance, before fees and expenses, of this Index)
• WisdomTree International SmallCap Dividend Index (WTISDI) (the WisdomTree International SmallCap Dividend Fund (DLS) seeks to track the price and yield performance, before fees and expenses, of this Index)
• WisdomTree International High Dividend Index (WTDHYE) (the WisdomTree International High Dividend Fund (DTH) seeks to track the price and yield performance, before fees and expenses, of this Index)