WisdomTree Investments, the exchange-traded fund firm known for
its "fundamental" indexes that screen stocks for earnings and
dividends, filed regulatory paperwork to market a low-volatility
ETF focused on Brazilian companies, combining two popular
ETF-market trends into one fund.
The WisdomTree Brazil Low Volatility Equity Fund will be
based on a WisdomTree index that comprises the 50 Brazilian
companies with the best combined rank of three factors:historical
volatility, return on equity, and return on assets, the prospectus
said. The starting universe is the equity securities of all
companies listed on BM&FBOVESPA, Brazil's primary stock
exchange, the filing said.
The plan to market such a fund has an undeniably trendy aspect
to it. After all, why not launch a fund that attempts to capture
the rising fortunes of Latin America's biggest economy, and through
the lens of low volatility? These two pockets of the ETF market
have yielded some of the most successful funds in the 20-year
history of the ETF industry.
On the one hand, the $7 billion and highly liquid iShares MSCI
Brazil Index Fund (NYSEArca:EWZ) casts a long shadow over the world
of emerging markets investments, and on the other hand, the $4
billion PowerShares S&P Low Volatility Portfolio
(NYSEArca:SPLV) has demonstrated how open some investors are to
navigating sometimes-roiled post-2008 markets with a specialized
The index underlying the proposed WisdomTree low-volatility
Brazil fund is weighted annually by a volatility factor that gives
more weight to companies with lower historical volatility.
Companies that qualify for inclusion in the index must have a
minimum market capitalization of $1 billion and minimum average
daily trading value of $2 million or more at the time of
WisdomTree said the index will have holdings in the following
sectors:consumer discretionary, consumer staples, energy,
financials, health care, industrials, information technology,
materials, telecommunication services and utilities.
WisdomTree didn't say in the filing what the fund's ticker or
annual expense ratio might be, but did say the ETF would have its
primary listing on the Nasdaq stock exchange.
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