WisdomTree (NASDAQ:WETF), an exchange-traded fund (“ETF”) and
exchange-traded product (“ETP”) sponsor and asset manager, today
announced that the WisdomTree Emerging Markets ex-State-Owned
Enterprises Fund (XSOE) and the WisdomTree China ex-State-Owned
Enterprises Fund (CXSE) will add exposure to China A shares in
seeking to track their underlying indexes in relation to a special
index rebalance scheduled to occur after the close of business on
August 11, 2017.
Jeremy Schwartz, WisdomTree Director of Research, said, “Over
the past year, WisdomTree has been evaluating the opportunity to
add China A shares to our proprietary indexes. Given the continued
openness of the Chinese domestic stock market to foreign investors,
we are operationally ready to implement this change.”
“The addition of China A shares to these indexes will provide
investors with a more complete, diversified exposure to China,”
Schwartz continued.
The underlying indexes tracked by CXSE and XSOE will add the 50
largest companies by float adjusted market capitalization that meet
the index requirements. The A share exposure will be capped at 25%
for the WisdomTree China ex-State-Owned Enterprises Index and 5%
for the WisdomTree Emerging Markets ex-State-Owned Enterprises
Index.
How Excluding State-Owned Companies Has Led to
Attractive Performance
The WisdomTree China ex-State-Owned Enterprises Fund (CXSE) and
the WisdomTree Emerging Markets ex-State-Owned Enterprises Fund
(XSOE) provide exposure to a more targeted group of emerging market
equities by excluding state-owned companies1. While the addition of
China A shares should not materially impact the funds, the
inclusion, in combination with the exclusion of state-owned
companies, allows WisdomTree to capitalize even further on
opportunities resulting from China’s economic shift toward
consumption and services.
“Rather than overexposing investors to energy and state-run
banking sectors which are dominated by state-owned enterprises,
CXSE is significantly allocated toward consumer discretionary and
technology sectors,” said Schwartz. “The strong performance of CXSE
and XSOE, which has a broader strategy, has been driven by this
exposure to growth-oriented and consumer-centric companies. We
believe the addition of China A shares will further enhance these
strategies by allowing for access to new securities as well as a
more complete exposure to the market.”
In June, WisdomTree implemented fee waivers2 for both CXSE and
XSOE, reducing the expense ratios for both funds to 0.32%.
The WisdomTree China ex-State-Owned Enterprises Index has an
average annualized total return of 13.31% since index inception,
while the WisdomTree Emerging Markets ex-State-Owned Enterprises
Index has an average annualized total return of 2.91% since index
inception3. View standardized performance for CXSE here and XSOE
here.
Performance is historical and does not guarantee future
results. Current performance may be lower or higher than
quoted. Investment returns and principal value of an investment
will fluctuate so that an investors shares, when redeemed, may be
worth more or less than their original cost. Performance data
for the most recent month-end is available at
www.wisdomtree.com.
You cannot invest directly in an index. 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.
Additional Index information is available at
www.wisdomtree.com.
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 to view or download a prospectus. Read the
prospectus carefully before you invest.
There are risks associated with investing, including possible
loss of principal. Foreign investing involves special risks, such
as risk of loss from currency fluctuation or political or economic
uncertainty. Investments in emerging or offshore markets are
generally less liquid and less efficient than investments in
developed markets and are subject to additional risks, such as
risks of adverse governmental regulation and intervention or
political developments. Funds focusing their investments on certain
sectors and/or regions increase their vulnerability to any single
economic or regulatory development. This may result in
greater share price volatility. Investments in currency
involve additional special risks, such as credit risk and interest
rate fluctuations. The Fund may invest in the securities
included in, or representative of, its Index regardless of their
investment merit and the Funds may not attempt to outperform its
Index or take defensive positions in declining markets. As
these Funds can have a high concentration in some issuers, the
Funds can be adversely impacted by changes affecting those
issuers.
China A Shares carry addition risk, the nature and extent of
intervention by the Chinese government in the Chinese securities
markets, uncertainties in the Chinese tax rules governing taxation
of income and gains from investments in A-shares could result in
unexpected tax liabilities for the fund which may reduce fund
returns. Any reduction or elimination of access to A-shares will
have a material adverse effect on the ability of the fund to
achieve its investments objective. There is potential for
unavailability of A-shares to which the fund will seek to obtain
exposure through investing in other investment companies. A-shares
are issued by companies incorporated in the People's Republic of
China ("PRC"). The A-share market in China is made available to
domestic PRC investors and certain foreign investors, including
those foreign investors that have been approved as Renminbi
Qualified Foreign Institutional Investors ("RQFII") or as Qualified
Foreign Institutional Investors ("QFII"). The Fund's ability to
achieve its investment objective is dependent on the ability of
other ETFs and counterparties to obtain their QFII or RQFII quota.
If the fund is unable to obtain sufficient leveraged exposure to
the CSI 300 due to the limited availability of necessary
investments or financial instruments, the fund could, among other
things, as a defensive measure, limit or suspend creation units
until the adviser determines that the requisite exposure to the
index is obtainable. During the period that creation units are
suspended, the fund could trade at a significant premium or
discount to its NAV and could experience substantial
redemptions.
Please read each Fund’s prospectus for specific details
regarding each Fund’s risk profile.
WisdomTree Funds are distributed by Foreside Fund Services, LLC
in the U.S. only.
WTPR-0089
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 $45.3 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.
1 WisdomTree defines state-owned enterprises as those having
government ownership of more than 20% of outstanding shares.
2 The net expense ratio of 0.32% for CXSE reflects a contractual
waiver of 0.31% through July 31, 2018. The net expense ratio of
0.32% for XSOE reflects a contractual waiver of 0.26% through July
31, 2018.
3 Performance data as of June 30, 2017.
Contact Information:
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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