WisdomTree (NASDAQ:WETF), an exchange-traded fund (“ETF”) and
exchange-traded product (“ETP”) sponsor and asset manager, today
announced the launch of the WisdomTree Barclays Yield Enhanced U.S.
Short-Term Aggregate Bond Fund (SHAG), on the BATS Exchange. SHAG
seeks to enhance yield by sourcing and reweighting subcomponents
within the short end of the U.S. Aggregate (“Agg”) fixed income
universe while maintaining similar risk characteristics and has a
net expense ratio of 0.12%1.
The Case for SHAG in a Rising Rate
Environment
In today’s current fixed income market environment, it can be
challenging to maintain an appropriate balance between risk and
return. While strong U.S. economic growth may boost credit returns,
it is also likely to lead to an increase in nominal interest rates.
In addition, core fixed income benchmarks have experienced a
dramatic shift from their historical composition over the last 20
years. For instance, because the government has outpaced
corporations in debt issuance, market-capitalization weighted
indexes are heavily weighted toward U.S. treasuries, which has
resulted in historically low yields.
Through its relationship with Bloomberg Barclays as index
provider, WisdomTree has developed an approach for SHAG that draws
on the same universe as the Bloomberg Barclays U.S. Aggregate
Index, but focuses on ways to reduce interest rate risk while at
the same time boosting yield. Using a disciplined, rules-based
approach, SHAG overweights credit securities and underweights
low-yielding treasuries.
“In a market environment where every basis point counts,
overweighting treasuries might not be your first stop on the road
to income,” said Kevin Flanagan, Senior Fixed Income Strategist at
WisdomTree. “SHAG may serve as a powerful tool for investors
seeking to navigate a potential rising rate environment.”
An Alternative to Traditional Agg Exposure
SHAG is WisdomTree’s second yield enhanced core fixed income
strategy offering, following the launch of the WisdomTree Barclays
Yield Enhanced U.S. Aggregate Bond Fund (AGGY) in 2015.
Both strategies seek to increase income potential of core fixed
income, while continuing to benefit from the risk mitigation and
diversification of a multi-sector portfolio. These strategies can
serve as a complement or replacement for existing core fixed income
strategies and are ideal for income-oriented investors looking to
pragmatically enhance yield or for those seeking opportunities
across different parts of the yield curve.
“AGGY has delivered strong performance and we’ve seen great
success with the Fund,” said Kevin Flanagan. “SHAG offers a
solution for those investors who wish to shorten the duration of
their fixed income portfolio while still focusing on income."
SHAG Quick Facts
Fund Name: WisdomTree Barclays Yield Enhanced
U.S. Short-Term Aggregate Bond FundTicker:
SHAGExchange: BATSExpense
Ratio: 0.12%1Exposure: U.S.
dollar-denominated, investment grade short-term fixed
income.Fund Objective: By sourcing opportunities
within the short maturity portion of the Agg, SHAG seeks to enhance
the income potential of a core bond portfolio, while continuing to
benefit from the diversification of a multi-sector portfolio.
Index Methodology: To enhance yield, the Bloomberg
Barclays U.S. Short Aggregate Enhanced Yield Index adjusts weights
across 13 subcomponents of the Short Agg Composite, subject to
tracking error, exposure and turnover constraints. The index
rebalances across the 13 subcomponents, adhering to the specified
constraints, on a monthly basis.
Learn more about the WisdomTree Barclays Yield Enhanced U.S.
Short-Term Aggregate Bond Fund (SHAG) here.
1The Fund's net expense ratio of 0.12% reflects a contractual
waiver of 0.08% through December 31, 2018.
Bloomberg Barclays U.S. Short Aggregate Enhanced Yield Index: a
constrained, rules-based approach that reweights the sector,
maturity, and credit quality of the Barclays U.S. Aggregate Index
across various subcomponents in order to enhance yield of
securities effectively maturing in 1 to 5 years.
This Fund is new and has limited operating history. You cannot
invest directly in an index. Past performance is not indicative of
future results. Index performance does not represent actual fund or
portfolio performance. A fund or portfolio may differ
significantly from the securities included in the index.
Index performance assumes reinvestment of dividends but does not
reflect any management fees, transaction costs or other expenses
that would be incurred by a portfolio or fund, or brokerage
commissions on transactions in fund shares. Such fees,
expenses and commissions could reduce
returns. WisdomTree, its affiliates and
their independent providers are not liable for any informational
errors, incompleteness or delays or for any actions taken in
reliance on information contained herein.
Investors should carefully consider the investment
objectives, risks, charges and expenses of the Fund before
investing. To obtain a prospectus containing this and other
important information, please call 866.909.WISE (9473) or visit
wisdomtree.com. Investors should read the prospectus carefully
before investing.
There are risks associated with investing, including possible
loss of principal. Fixed income investments are subject to interest
rate risk; their value will normally decline as interest rates
rise. Fixed income investments are also subject to credit risk, the
risk that the issuer of a bond will fail to pay interest and
principal in a timely manner, or that negative perceptions of the
issuer’s ability to make such payments will cause the price of that
bond to decline. Investing in mortgage- and asset-backed securities
involves interest rate, credit, valuation, extension and liquidity
risks and the risk that payments on the underlying assets are
delayed, prepaid, subordinated or defaulted on. Due to the
investment strategy of the Fund, it may make higher capital gain
distributions than other ETFs. Please read the Fund’s prospectus
for specific details regarding the Fund’s risk profile.
WisdomTree Funds are distributed by Foreside Fund Services, LLC,
in the U.S. only.
Kevin Flanagan is a registered representative of Foreside Fund
Services, LLC.
WTPR-0076
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the
U.S., Europe, Japan and Canada (collectively, “WisdomTree”), is an
exchange-traded fund (“ETF”) and exchange-traded product (“ETP”)
sponsor and asset manager headquartered in New York.
WisdomTree offers products covering equities, fixed income,
currencies, commodities and alternative strategies.
WisdomTree currently has approximately $45.1 billion in assets
under management globally. For more information, please visit
www.wisdomtree.com or follow us on Twitter @WisdomTreeETFs.
WisdomTree® is the marketing name for WisdomTree Investments,
Inc. and its subsidiaries worldwide.
Contact Information
Media Relations
WisdomTree Investments, Inc.
Jessica Zaloom / Kylie Scott
+1.917.267.3735 / +1.917.267.3860
jzaloom@wisdomtree.com / kscott@wisdomtree.com
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