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WisdomTree Launches Two New Smart Beta Fixed Income ETFs

WisdomTree  announced the launch of the WisdomTree EUR Government Bond Enhanced Yield UCITS ETFs (WTDR) and the WisdomTree EUR Aggregate Bond Enhanced Yield UCITS ETF (WTDP) on the Deutsche Börse Xetra…

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Christopher Gannatti, WisdomTree Head of Research in Europe


The strategies seek to take a more intuitive approach to indexing by seeking to provide enhanced yields on core European investment grade bonds and treasuries, without potentially riskier exposures.

WisdomTree EUR Aggregate Bond Enhanced Yield UCITS ETF aims to achieve both a higher yield and a low tracking error with respect to the market benchmark, the Bloomberg Barclays Euro Aggregate Bond Index, which measures the performance of the investment grade, Euro denominated, fixed rate bond market, including treasuries, government-rated, corporate and securitized bonds. The ETF does this by following a rules-based approach which tilts the weights of the market benchmark towards higher yielding segments of the market while controlling risk and tracking error vs the market benchmark. TER is 0.18%

WisdomTree EUR Government Bond Enhanced Yield UCITS ETF aims to achieve both a higher yield and a low tracking error with respect to the market benchmark, the Bloomberg Barclays Euro Treasury Bond Index, which measures the performance of the investment grade, Euro denominated, fixed rate government bonds issued by the sovereign countries participating in the EMU. The ETF does this by following a rules-based approach to tilt the weights of the market benchmark towards higher yielding segments of the market while controlling for risk and tracking error versus the market benchmark. TER is 0.16%

Rafi Aviav, WisdomTree Head of Product Development in Europe, said, “The new ETFs launched today are an important addition to the European fixed income fund landscape. The strategy employed by both funds offers a unique solution for investors to potentially increase the yield they’re getting from the market while tightly controlling risk. By tilting towards yield the strategy aims to deliver on one of the most important attributes for fixed income investors, while avoiding excessive tracking error and risk-taking with respect to the benchmark.”

Christopher Gannatti, WisdomTree Head of Research in Europe said, “Many fixed income investors today are faced with two broad options: actively managed strategies or exchange traded products that track market capitalisation-weighted indices. However, this often leads to investors lending more capital to the issuers that already hold the most debt. Here we take a ‘smart beta’ approach to fixed income. We have taken two existing universes of fixed income securities and applied an algorithmic approach to try to “squeeze” as much extra income out of these constituents as possible while remaining sensitive to tracking error constraints, bringing the potential for alpha.”

Source: ETFWorld.co.uk

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