If you think there are already too many dividend exchange-traded funds out there, ETF upstart WisdomTree Investments would like to disabuse you of that notion. And it’s going to do so with a sledgehammer: twenty new funds.
New York-based WisdomTree filed for the funds – its first – last week, just before the most recent dividend ETF, First Trust Advisor’s Morningstar Dividend Leaders Fund, hit the market. The move will almost quadruple the number of dividend ETFs in the U.S.The new funds – six covering U.S. companies, 14 covering those from abroad – seek to differentiate themselves from the existing funds by offering investors varied slices of the dividend-paying market, with funds specializing in small-, mid- and large-cap companies, as well as in companies that pay a consistently high dividend.
Most current dividend ETFs are of the broad-market variety. The new funds also eschew market-cap weighting, favoring instead a weighting based on either the amount of cash dividends paid or the dividend yield, according to the preliminary prospectus filed with the Securities and Exchange Commission. In another departure from traditional ETF practice, WisdomTree itself is the creator and calculator of the indices upon which the ETFs are based.
The 20 funds are based on three primary indices, covering the U.S.; Europe, Far East Asia and Australasia (DIEFA); and the Pacific Rim (DIPR). For inclusion in the U.S. index, companies must have a market-cap of at least $100 million, for the DIPR index, $200 million. Companies in the DIEFA index must have paid at least $5 million in cash dividends as of the rebalancing date.
A spokesman for WisdomTree said the firm will not comment while the funds are in registration.
WisdomTree has made rumblings since late 2004 about entering the now more than $300 billion ETF industry. True to its name, it counts Wharton School professor and investment guru Jeremy Siegel as an advisor. Last year it hired two alumni of industry leader Barclays Global Investors, Raymond DeAngelo as director of ETF distribution and Marc Ruskin as CFO.
WisdomTree, formerly known as Index Development Partners, has not determined the fees to be charged. The funds are expected to be listed on the New York Stock Exchange, according to the preliminary prospectus.
TABLE (if possible)
WisdomTree ETFs in Registration
Domestic Equity Funds
| Total Dividend Fund |
| High-Yielding Equity Fund |
| LargeCap Dividend Fund |
| Dividend Top 100 Fund |
| MidCap Dividend Fund |
| SmallCap Dividend Fund |
| International Equity Funds |
| DIEFA (Dividend Index of Europe, Far East Asia and Australasia) Fund |
| DIEFA High-Yielding Equity Fund |
| Europe Total Dividend Fund |
| Europe High-Yielding Equity Fund |
| Europe SmallCap Dividend Fund |
| Japan Total Dividend Fund |
| Japan High-Yielding Equity Fund |
| Japan SmallCap Dividend Fund |
| DIPR (Dividend Index of the Pacific Region) Fund |
| DIPR High-Yielding Equity Fund |
| International LargeCap Dividend Fund |
| International Dividend Top 100 Fund |
| International MidCap Dividend Fund |
| International SmallCap Dividend Fund |
Source: Securities and Exchange Commission
