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WisdomTree launches UK Equity Income UCITS ETF

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WisdomTree has announced the listing of the WisdomTree UK Equity Income UCITS ETF (WUKD) on the London Stock Exchange today. The WisdomTree UCITS ETFs are physical funds, and in the case of the UK equity income strategy fully replicates the index.

The WisdomTree UK Equity Income Index strategy is comprised of the highest 33 per cent of UK domiciled companies, from the WisdomTree UK equity universe, ranked by dividend yield. The resulting constituents are used to construct a diversified basket of stocks, with a 3 per cent single stock weighting cap, a 25 per cent sector cap and a unique fundamental weighting strategy based on the absolute amount of dividends paid by the companies.
 
The firm writes that the methodology helps to mitigate risk and focus on the larger dividend paying stocks. They refer to academic research which shows that indices weighted by dividends, or which include higher yielding companies, have tended to outperform market capitalisation indices over the long run.
 
Viktor Nossek, (pictured) Director of Research at WisdomTree Europe says: “The WisdomTree UK Equity Income UCITS ETF provides for greater diversification than is typical in other UK income strategies. It has over 100 constituents and features a large cap bias with over 83 per cent of the index comprised of stocks with market capitalisation greater than GBP10 billion and close to 15 per cent in mid-cap stocks. The capping of individual sector exposures at 25 per cent creates a more balanced portfolio construction compared to other unconstrained strategies, providing risk control at different parts of the investment cycle. In addition, a historic dividend yield of 5.9 per cent compares favourably to competing indices.”
 
Hector McNeil, Co-CEO of WisdomTree Europe comments: “Based on client demand for WisdomTree’s Equity Income methodology, this is the first ETF which WisdomTree Europe is launching dedicated to the UK market. WisdomTree’s methodology combines experience and track record, with a high yielding broad index – something which investors will find useful in today’s low interest rate environment”.
 

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