IXSE Offers Access to Growth Potential of India
without Government Ownership
WisdomTree (NASDAQ: WETF), an exchange-traded fund (“ETF”) and
exchange-traded product (“ETP”) sponsor and asset manager, today
announced the launch of the
WisdomTree India ex-State-Owned
Enterprises Fund (IXSE) on the NYSE Arca.
IXSE seeks to track the price and yield performance, before fees
and expenses, of the WisdomTree India ex-State-Owned Enterprises
Index and has an expense ratio of 0.58%.
Current Investment Opportunity in India
India is one of the world’s largest and most easily accessible
economies, forecasted to grow over 7% for the foreseeable future.
Over the last five years, more than one-third of large-cap
companies in India increased their book value by over 50% and
nearly three-fifths of small-cap firms generated profits. This
growth is exceptional even by emerging market standards.1
In addition, there have been significant fundamental and
structural changes that have taken place in India’s economy over
the last few years including financial reforms, socioeconomic
changes and infrastructure developments. The fast pace of reform
throughout India has made it easier for many firms to piggy-back on
the tailwinds provided by the significant growth of the overall
economy.
As the world’s largest democracy faces an upcoming election,
WisdomTree believes that irrespective of who comes to power, the
trajectory for India’s growth is set for multiple years and
possibly decades to come.
Why Exclude State-Owned Companies?
Similar to the WisdomTree Emerging Markets ex-State-Owned
Enterprises Fund (XSOE) and the WisdomTree China ex-State-Owned
Enterprises Fund (CXSE), IXSE provides exposure to a more targeted
group of equities by investing in companies incorporated and traded
in India and excluding common stocks of state-owned enterprises
(SOEs), defined as companies with more than 20% government
ownership.
“We believe governments, particularly in emerging markets, may
not always be the best stewards of capital, and as a result,
government-owned companies might be influenced by a broader set of
interests beyond generating profits for shareholders. This can
often lead to inefficiencies and can impact the long-term growth
potential of these companies,” explains Jeremy Schwartz, WisdomTree
EVP and Global Head of Research.
By excluding SOEs, IXSE potentially provides an alternative way
to gain beta exposure to the private sector companies in India and
excludes unprofitable banks and financial firms. Additionally, the
strategy enhances stock selection in other capital-intensive
sectors such as energy and industrials, where dominance by
state-owned companies is typically higher.
Comparing SOEs vs. non-SOEs
IXSE offers a tilt toward the consumer economy, resulting in
greater exposure to information technology and consumer
discretionary sectors, and reduced exposure to financial and energy
sectors. This is particularly important, as the technology and
consumer discretionary sectors have been among the key drivers of
emerging market returns and growth.
WisdomTree conducted an analysis to explore whether Indian SOEs
performed differently than non-SOEs over time. In comparing a broad
market capitalization-weighted portfolio of Indian SOEs and
non-SOEs, results indicated that there had been a consistent
performance gap in favor of non-SOEs, with an average annual return
over the last 10 years of approximately 12.31%, compared to 7.22%
for SOEs.2
While SOEs represent a smaller segment of the total Indian
market when compared with China, for example, these results further
demonstrate the value of excluding state-owned enterprises within
Indian equities over the long-term.
Learn more about the WisdomTree India ex-State-Owned Enterprises
Fund (IXSE) here.
This Fund is new and has limited operating history. Past
performance is not indicative of future results.
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. This Fund focuses its investments in
India, thereby increasing the impact of events and developments
associated with the region which can adversely affect
performance. Investments in emerging, offshore or frontier
markets such as India 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. Due to the
investment strategy of this Fund it may make higher capital gain
distributions than other ETFs. The Fund invests in the
securities included in, or representative of, its Index regardless
of their investment merit and the Fund does not attempt to
outperform its Index or take defensive positions in declining
markets. Please read the Fund’s prospectus for specific details
regarding the Fund’s risk profile.
Investors should carefully consider the investment
objectives, risks, charges and expenses of the Funds before
investing. To obtain a prospectus containing this and other
important information, call 866.909.9473 or visit wisdomtree.com.
Read the prospectus carefully before you invest.
WisdomTree Funds are distributed by Foreside Fund Services, LLC,
in the U.S. only.
Jeremy Schwartz is a registered representative of Foreside Fund
Services, LLC.
WTPR-20190402-0046
About WisdomTree WisdomTree Investments,
Inc., through its subsidiaries in the U.S., Europe 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 $59.1 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
1 Source: FactSet, Bloomberg. As of 12/31/2018
2 Source: WisdomTree, FactSet, Bloomberg, 1/1/2008 – 12/31/2018
and corresponds with earliest date of available data. Universe of
securities is the MSCI India Index. Average market cap weight of
state-owned enterprises within the universe over the period was
18.5%. Returns are calculated in U.S. dollars. Past performance is
not indicative of future results. You cannot invest directly in an
Index.
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