The WisdomTree Yield Enhanced U.S. Aggregate Bond Fund (AGGY) was launched on 07/09/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Total Bond Market ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Wisdomtree, and has been able to amass over $419.08 M, which makes it one of the average sized ETFs in the Total Bond Market ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for AGGY are 0.12%, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 3.02%.
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.
Taking into account individual holdings, Us Treasury Note 2.75% 2/15/2028 accounts for about 0.41% of the fund's total assets, followed by Us Treasury Notes 2.25% and Us Treasury Note 3.375% 11/15/2019.
Its top 10 holdings account for approximately 3.52% of AGGY's total assets under management.
Performance and Risk
AGGY has lost about -2.44% so far this year, and as of 07/23/2018, is down about -1.18% in the last one year. In the past 52-week period, the fund has traded between $48.20 and $51.19.
The fund has a beta of 0.05 and standard deviation of 3.51% for the trailing three-year period, which makes AGGY a medium choice in this particular space. With about 2136 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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