Designed to provide broad exposure to the Total Bond Market ETFs category of the market, the WisdomTree Yield Enhanced U.S. Aggregate Bond Fund (AGGY) is a smart beta exchange traded fund launched on 07/09/2015.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
AGGY is managed by Wisdomtree, and this fund has amassed over $418.30 M, which makes it one of the average sized ETFs in the Total Bond Market ETFs. Before fees and expenses, AGGY seeks to match the performance of the Bloomberg Barclays U.S. Aggregate Enhanced Yield Index.
The Bloomberg Barclays U.S. Aggregate Enhanced Yield Index broadly capture the U.S. investment grade, fixed income securities market while seeking to enhance yield within desired risk parameters and constraints.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.12% for AGGY, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 3.14%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Us Treasury Note 2.875% 5/15/2028 accounts for about 0.43% of the fund's total assets, followed by Us Treasury Note 2.75% 2/15/2028 and Us Treasury Note 2.625% 11/15/2020.
The top 10 holdings account for about 3.47% of total assets under management.
Performance and Risk
The ETF has lost about -2.05% so far this year and is down about -1.62% in the last one year (as of 09/07/2018). In the past 52-week period, it has traded between $48.20 and $51.10.
AGGY has a beta of 0.05 and standard deviation of 3.50% for the trailing three-year period, which makes the fund a medium choice in the space. With about 2117 holdings, it effectively diversifies company-specific risk.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center .
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