ETF Thought Leadership Center

Published on November 9, 2012 | Updated June 25, 2014

As the ETF industry has moved from a closet industry to the investing mainstream, the products and strategies available through the exchange-traded wrapper have become increasingly advanced. This resource is intended to provide financial advisors and individual investors with the latest research and analysis from the organizations who know ETFs best–the issuers themselves. The documents presented here include detailed investment theses, actionable ideas, and educational materials that shed light on the nuances of ETFs and potentially inspire portfolio strategies.

To submit a piece for consideration in the ETF Thought Leadership Center, please email michael.johnston@etfdb.com.

WisdomTree ETFs: Japan Hedged Equity Fund

Though the ETF industry has certainly opened the doors for investors looking to gain access to hundreds of countries across the globe, one particular powerhouse nation continues to be one of the most compelling investments out there; Japan. Although there are many exchange-traded products that offer exposure to this country, most do not consider one critical factor that can make a significant impact on bottom line returns: currency fluctuations. In this publication, WisdomTree makes a case for its Japan Hedged Equity Fund (DXJ), highlighting the products’ ability to more fully access the return potential of Japanese equities in a weakening yen environment. 

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Assessing Concentration Risk In Individual Countries

With the evolution of the ETF industry cracking the investing world wide open, average investors can now get cheap and easy access to nearly every corner of the market. Whether it be a plain-vanilla S&P 500 fund or a hedge fund replicating ETF, the possibilities are endless for investors looking to fine tune their portfolios. Of the recent innovations, single-country ETFs have gained tremendous popularity among those wishing to establish tactical tilts towards certain areas of the world. This research publication from Vanguard, however, warns investors that these hyper-targeted products can often suffer from high levels of concentration and gives investors several suggestions on how to mitigate this risk.

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Emerging Market Debt: The New Opportunistic Fixed Income

Emerging markets have become the center of attention in recent years, as this lucrative corner of the market has demonstrated its potential for serving as an excellent diversifying agent in addition to enhancing bottom-line portfolio returns over the long-haul. While most investors turn to equities for their emerging market exposure, there is yet another option that may be more appealing: emerging market debt. This “opportunistic fixed income” segment offers investors meaningful current return, while at the same time maintaining a relatively low level of volatility as compared to emerging market equities. WisdomTree’s case is quite compelling, and opportunity for investors to embrace this niche segment withing the ETF wrapper certainly warrants a closer look.

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Foreign Investments

A Case For Tilt Investing

Tilt investing is by no means a new concept for investors, as many have used this innovative strategy to improve risk-adjusted returns. The approach involves systematically embracing certain anomalies that exist in the market, and harnessing their potential to outperform the broad-based market over extended periods of time. In this publication, State Street makes its case for tilt investing, and describes how investors can use ETFs as a cost-effective and efficient means of applying this strategy.

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The Case For Small Cap Earnings

While there are numerous approaches investors can take to the equity universe, often times it is difficult to identify those investments that maintain a suitable balance between maximizing compelling returns and an acceptable level of risk. Small cap equities are known for being one of the most volatile and unstable segments of the market, but a close look at a niche corner of small cap investing suggests that there may be a way for investors to find the perfect balance. In this case study, WisdomTree delves into the world of low P/E small cap stocks, highlighting the sub-sectors long-run performance.

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Investment Strategies

Longer-Term Strategies for Geared ETFs

Geared exchange-traded products – better known as leveraged and inverse ETFs – have certainly had their fair share of investor attention, but not always in the best light. These products are generally considered to be used only as short-term tactical tools, as volatile prices swings make it difficult for investors to capture amplified returns over a longer time frame. ETF issuer ProShares, however, outlines two compelling strategies for those looking to invest in geared ETFs  for an extended period of time.

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A Case For High Yield Municipal Bond Investing

Investments in municipal bonds have long been a popular option for those in higher tax brackets, as the  tax-exempt feature of the interest payment boosts the tax-equivalent yield realized. This corner of the fixed income market is also known for its relatively low risk, and is often favored over significantly lower-yielding U.S. Treasury bonds. In this publication, State Street makes its case for why municipal bonds can be an attractive investment for income seeking investors looking to further diversify their portfolio.

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Fixed Income In Focus

How And Why To Choose Commodity Exchange Traded Products

The rapid development of the ETF industry has essentially democratization the world of commodity investing, providing investors cheap and easy access to a previously hard-to-reach asset class. There are now roughly 150 ETFs available designed to offer investors access to this corner of the market, with options ranging from single-commodity products to more broad-based funds that offer exposure to the entire space. Given this wide and increased variety of commodity ETPs, Teucrium offers investors advice on how to pick the right fund and why these additions could be beneficial to your portfolios.

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Commodity Central