Wall Street got off to a relatively good start this week, as investors weighed mixed earnings and economic reports. On the macro front, China’s HSBC’s manufacturing PMI came in at 48.1; readings below 50 signal contraction. The U.S. non-manufacturing sector, however, picked up steam in April, with PMI coming in at 55.2. Elsewhere, investors turned their attention to Federal Reserve Chairwoman Janet Yellen as she testified before Congress on Wednesday.
WisdomTree’s new International Hedged Dividend Growth Fund (IHDG) tracks the WisdomTree International Hedged Dividend Growth Index. The benchmark is designed to provide exposure to the developed market companies in the EAFE region while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar. The index selects the top 200 companies from the WisdomTree DEFA Equity Income Index with the best growth and quality factors.
Currently, IHDG’s portfolio is heavily tilted towards consumer staples and consumer discretionary stocks, which, combined, account for roughly 40% of the fund’s total assets. IHDG does, however, provide meaningful exposure to other sectors including health care, industrials, materials, and telecom.
In terms of geographical diversification, stocks from the U.K represent about 20% of the portfolio, and equities from Switzerland, Australia, Germany, Sweden, and Japan also receive meaningful allocations. Currently, IHDG’s top three holdings are Roche Holding AG (ROG), BHP Billiton (BHP), and Nestle SA (NESN). The fund charges an expense ratio of 0.58%.
A Focus on European Dividend Growth
The Europe Dividend Growth Fund (EUDG) is linked to the WisdomTree Europe Dividend Growth Index. Like IHDG’s underlying index, the benchmark selects from the WisdomTree DEFA Index, but focuses on dividend-paying companies domiciled in Europe with strong growth characteristics.
EUDG is also heavily invested in consumer staples, but the fund has a larger allocation to health care equities than IHDG. The fund also offers exposure to consumer discretionary, industrials, energy, and materials equities [See 101 ETF Lessons Every Financial Advisor Should Learn].
Similar to IHDG again, EUDG’s portfolio is largely made up of U.K. securities, as well as stocks from Switzerland and Germany. Perhaps the biggest similarity between the two funds is the top three holdings: Roche Holding AG (ROG), BHP Billiton (BHP), and Nestle SA (NESN). Considering that both funds’ underlying indexes are based on the DEFA Index, it isn’t too surprising to see such an overlap. EUDG charges an expense ratio of 0.58%.
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Disclosure: No positions at time of writing.