WisdomTree, a global financial innovator, has expanded its Efficient Core ETF range in Europe with the launch of the WisdomTree Global Efficient Core UCITS ETF (NTSG).
NTSG, seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Global Efficient Core Index (the Index) and has a Total Expense Ratio (TER) of 0.25%. NTSG, listed today on Börse Xetra and Borsa Italiana, and will list on the London Stock Exchange on 13 November 2024.
The index is designed to deliver a 90% exposure to large cap global developed equities and 60% to global government bond futures, effectively providing a leveraged, more capital efficient alternative to the traditional 60/40 portfolio.
The ETF invests 90% of its assets in a diversified basket of large cap companies, that meet WisdomTree’s ESG (environmental, social and governance) criteria. To help magnify the benefits of the asset allocation, a 60% exposure to global government bond futures is then overlaid on top, using the remaining 10% of the portfolio as cash collateral for the futures. The futures portfolio consists of US, German, UK and Japanese government bond futures contracts with maturities ranging from two to 30 years. The exposures are rebalanced quarterly[2].
The strategy behind WisdomTree’s Efficient Core ETF range is grounded in academia and based on modern portfolio theory. Academics have long argued that the optimal portfolio for a given level of risk is a leveraged version of the portfolio that presents the best Sharpe ratio. By leveraging a traditional 60/40 portfolio, investors can receive a similar level of volatility present in a portfolio 100% allocated to equities but with the better Sharpe ratio of a 60/40 portfolio.
Pierre Debru, head of quantitative research & multi asset solutions, WisdomTree, said: “The Efficient Core concept aims to provide another powerful tool for investors to push the boundaries of what is possible to improve their portfolios. By combining the two main tools from the modern portfolio theory, diversification and leverage, it is possible to unlock even more efficient portfolios.
"The result is intended to be a portfolio that maintains a high correlation to the market for possible equity upside, with potentially lower volatility and drawdowns through greater fixed income exposure, while also allowing for allocations to other diversifiers or alternative strategies, like broad commodities, gold or crypto assets.”
WisdomTree Global Efficient Core UCITS ETF will form part of WisdomTree's $1.5bn range of Efficient Core strategies.
Alexis Marinof, head of Europe, WisdomTree, added: “Our research-driven Efficient Core ETFs are a demonstration of the synergies and innovations WisdomTree can bring to investors as a global and differentiated ETF issuer.
"WisdomTree’s thoughtful approach to innovation is focused on bringing solutions that add value to portfolios and that help investors achieve their investment objectives. Through this range of ETFs investors can make their capital work harder by enhancing the efficiency of core asset allocation while improving a portfolio’s risk/return profile”.
