ETF sponsor and index developer WisdomTree has announced the planned launch on NYSE Arca tomorrow of the WisdomTree LargeCap Growth Fund, which it says is the first fundamentally-weighted
ETF sponsor and index developer WisdomTree has announced the planned launch on NYSE Arca tomorrow of the WisdomTree LargeCap Growth Fund, which it says is the first fundamentally-weighted growth fund to offer broad-based exposure to large-cap US growth stocks.
Wharton professor Jeremy Siegel, a senior advisor to WisdomTree, says: ‘I devoted the first chapter of my book, The Future for Investors, to what I call the growth trap, the longstanding problem of investors paying too much for the future prospects of growth companies.’
WisdomTree chief executive Jonathan Steinberg says: ‘We believe growth’s historic underperformance may have more to do with how the major growth indexes are constructed than with growth stocks themselves.
‘WisdomTree’s investment philosophy can be applied across the entire field of equity investing. Bringing our fundamental weighting methodology to the growth universe is an important extension of our effort to address what we believe to be the flaws of traditional, market capitalisation-weighted indexes.’
The fund, which has an expense ratio of 0.38 per cent, aims to track the WisdomTree LargeCap Growth Index, a fundamentally-weighted index that measures the stock performance of around 300 US large-cap growth companies, with initial weights for each company in the index set annually based on earnings generated in the previous four quarters.
WisdomTree creates ETF using its own fundamentally-weighted index methodology, licenses its indices to third parties for proprietary products, and offers a platform to promote the use of WisdomTree ETFs in US 401(k) retirement savings plans. Around USD3.5bn in assets are currently managed against the WisdomTree Indexes by the firm and third parties under license.
