WisdomTree Emerging Markets Equity Income UCITS ETF

Issuer: WisdomTree

Asset Class: Equity

TER: 46bps

Trading Currency: USD

Pays Income: False

Listing Date: 08 Nov 2016

Ticker: DEMR

ISIN: IE00BDF12W49

This investment product provides targeted exposure to emerging market equities with a distinct focus on dividend income. It is designed for investors seeking to capture the growth potential inherent in developing economies while mitigating some of the associated volatility through a focus on established, dividend-paying companies. By targeting firms that generate consistent cash flows and distribute profits to shareholders, the strategy aims to provide a more stable return profile compared to broad, market-cap-weighted emerging market indices. This approach can be particularly appealing for those looking for a combination of capital appreciation and a potential source of income from their international equity allocation.

The underlying portfolio is constructed by tracking an index that screens a universe of emerging market stocks for their dividend-paying characteristics. The methodology is fundamentally driven, weighting constituents based on the cash dividends they are projected to pay over the next year. This dividend-weighting system inherently tilts the portfolio towards companies with strong balance sheets and sustainable earnings, often reflecting a value bias. This contrasts with traditional market-cap weighting, which can lead to overconcentration in a few large-cap growth stocks. The strategy is physically replicated, meaning it holds the actual shares of the underlying companies, providing direct ownership.

Incorporating this fund into a portfolio can serve several purposes. It offers a strategic way to diversify beyond developed markets, tapping into the demographic and economic growth trends of emerging nations. For income-oriented investors, it presents an opportunity to enhance portfolio yield with distributions sourced from a geographically diverse set of companies. The smart-beta, dividend-focused approach provides a rules-based, transparent method for gaining value-oriented exposure to a high-growth asset class, potentially offering a risk-adjusted path to long-term returns.