WisdomTree’s Ex-U.S. Real Estate Fund to Get Overhaul

The fund will be changing to the WisdomTree New Economy Real Estate Fund (WTRE), according to the fund restructure FAQ on the WisdomTree website. DRW currently tracks the WisdomTree Global ex-U.S. Real Estate Index, but when it becomes WTRE, it will track the CenterSquare New Economy Real Estate Index and will invest in the U.S.

This new index will also pull from a global pool of equity securities of companies that derive a significant portion of their revenues from real estate or else are real estate investment trusts (REITs), including those that are ADRs. Companies included must make at least 75% of their revenues from either real estate rental or from supplying services or goods to both residential and commercial property owners. These goods and services must be related to the management, maintenance, lease, rental, sale, or development of real estate.

Securities are first screened for ESG factors and then are screened for their use of technology and the revenue that they generate from either being directly involved in or leasing real estate to tenants that work within research and development, telecommunications, or other technology and life science industry-related fields. They are additionally screened for their level of exposure to e-commerce, sciences, and new economy logistics such as supply chain, with the index including those securities that score highest.

The index screens out overleveraged companies that have a debt to total market cap that’s over 70%, and then overweights high growth and valuation companies that are focused on technology, with no single security having more than a 7.5% weighting.

Companies must be listed on national exchanges in either the U.S., Australia, Canada, Europe, Hong Kong, Israel, Singapore, or the Tokyo Stock Exchange to be included in the index.

As of January 20, country exposures for the index were the U.S. at 60.4%, the U.K. at 8.2%, Australia at 7.7%, Japan at 5.9%, Singapore at 5.1%, Spain at 4.0%, Canada at 2.7%, China at 2.6%, Switzerland at 0.9%, Hong Kong at 1.0%, Italy at 0.9%, and Belgium at 0.7%, according to the index website.

Sector exposure during the same time for the index was logistics/supply chain at 42.0%, towers at 21.4%, data centers at 14.3%, office at 10.7%, life science at 4.8%, hotel at 4.1%, and diversified at 2.7%.

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